Do Kwon & Terraform Labs Case: SEC Urges Summary Judgment

The SEC-provided "evidence" of violations implicates Kwon in deceiving cryptocurrency investors through the development and promotion of Terra and its proprietary Terra tokens as securities.

Do Kwon and Terraform Labs Case: SEC Urges Summary Judgment

In regard to the alleged violations by Terraform Labs, the United States Securities and Exchange Commission (SEC) has challenged the jury’s verdict and requested a summary judgment on all the allegations.

The SEC was reluctant to accept the jury’s leniency regarding Do Kwon and his role in facilitating the fras that ultimately led to the collapse of the Terra ecosystem, according to a court filing dated October 27.

The document submitted to the Southern District of New York U.S. District Court stated:

“No rational jury could conclude that Kwon was not liable for Terraform’s violations of Exchange Act Section 10(b) and Rule 10b-5 thereunder pursuant to Exchange Act Section 20(a).”

The SEC-provided “evidence” of violations implicates Kwon in deceiving cryptocurrency investors through the development and promotion of Terra and its proprietary Terra tokens as securities.

Do Kwon and Terraform Labs Case: SEC Urges Summary Judgment
SEC seeks summary judgment in Kwon and Terraform Labs case. Source: CourtListener

Kwon and Terraform Labs petitioned the judge to dismiss the SEC’s lawsuit on the same day, contending that Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and its mirrored assets (mAssets) do not qualify as securities, contrary to the SEC’s claim.

The SEC, on the other hand, asserts that Kwon and Terraform Labs engaged in fraudulent activities, offered and sold securities, sold LUNA and MIR in unregistered transactions, and participated in transactions involving mAssets.

The attorney for Terra co-founder Daniel Shin attributed the collapse of the Terra ecosystem to the “unreasonable operation of the Anchor Protocol and external attacks carried out by Do-hyung Kwon.”

However, in recent times, the organization has placed the blame on market maker Citadel Securities, alleging a “concerted, intentional effort” to decouple its TerraUSD (UST) stablecoin in 2022.

Do Kwon and Terraform Labs Case: SEC Urges Summary Judgment
Screenshot from the filing by Terraform compelling Citadel to provide additional documents. Source: CourtListener

“This frivolous motion is based on false social media posts and ignores information we already provided confirming we had no role whatsoever in this matter,” Citadel Securities said in a statement to Cointelegraph.