In the ongoing Terraform securities fraud case pursued by the U.S. Securities and Exchange Commission (SEC), Terraform Labs, and its co-founder, Do Kwon, have filed a motion for summary judgment. They are asking a federal judge to rule in their favor, effectively dismissing the SEC’s accusations without the need for a trial.
Challenging SEC’s Case
Terraform contends that the SEC has failed to make a compelling case that the company offered unregistered securities.
Despite two years of investigation, a discovery period involving over 20 depositions, and the exchange of more than two million pages of documents, Terraform argues that the SEC hasn’t provided sufficient evidence of wrongdoing on the part of the defendants.
Key Arguments in the Motion
In their motion for summary judgment, Terraform and Do Kwon assert that the SEC has failed to successfully demonstrate the involvement of the crypto company in offering securities. They emphasize the lack of progress in proving their alleged misconduct, stating that the SEC’s case remains unconvincing.
The case stems from a significant issue in 2022 when Terraform, a stablecoin issuer, faced a $40 billion disaster. Following the collapse of its TerraUSD stablecoin (UST) and Luna cryptocurrency, the SEC accused Terraform and Do Kwon of selling unregistered securities, resulting in a massive fraud that caused substantial losses to investors.
Challenging Expert Opinions
In addition to seeking summary judgment, Terraform is also requesting the court to dismiss the views of experts enlisted by the SEC to support its case. They critique the analysis provided by one expert, a Rutgers University professor, as “conceptually flawed.”
Terraform’s earlier attempt to have the case dismissed outright was rejected by the court. The judge noted that the SEC had made a “plausible claim” that Terraform had offered investment contracts, falling within the SEC’s securities enforcement jurisdiction.
Do Kwon’s Extradition and Testimony
Do Kwon has also asked court to reject SEC’s request to question him in the U.S. regarding company’s token crash. His lawyers argue that bringing Kwon to the U.S. is “impossible” as he is currently detained in Montenegro. Both South Korean and U.S. authorities have sought his extradition.
The SEC has also declined to comment on the latest developments in the case.
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