Attorneys representing Terraform Labs and Do Kwon have filed a motion for summary judgment, arguing that the defendants didn’t do anything wrong and the judge overseeing the case should make a ruling without moving the case forward to a trial. The lawyers claim that the SEC has failed to prove that the company offered securities after two years of investigation and extensive discovery.
Terraform, Do Kwon Move For Summary Judgment
Collapsed stablecoin issuer Terraform Labs and its co-founder Do Kwon have requested a U.S. federal judge to nix a securities and fraud lawsuit from the U.S. Securities and Exchange Commission (SEC).
The legal team for Kwon and Terraform Labs argued in a filing last week that Terra ecosystem cryptocurrencies Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and its mirrored assets (mAssets) do not qualify as securities as the SEC alleged in a complaint in February.
“But after two years of investigation, the completion of a discovery period that resulted in the taking of more than 20 depositions, and the exchange of over two million pages of documents and data, the SEC is evidentiarily no closer to proving that the Defendants did anything wrong,” the filing says.
Kwon and Terraform Labs then raised concerns about the securities watchdog claiming that they secretly transferred millions of dollars into Swiss bank accounts for their gain. As you can recall, the SEC previously said that the defendants moved 10,000 BTC to a Switzerland-based financial company, Sygnum. Kwon and Terraform Labs maintain that this allegation is false, adding that the SEC is attempting to draw parallels between the now-defunct FTX and Terraform.
“In a more outrageous example, in a transparent attempt to make this case seem like FTX, Celsius, and other cases involving thefts of customer funds, the SEC alleges that Defendants secretly moved millions of dollars into Swiss bank accounts for personal gain,” the attorneys posited.
It’s pertinent to mention here that presiding Judge Jed Rakoff has previously denied an attempt by Terraform Labs to have the suit tossed out.
Terraform Co-Founder Blames Kwon For Terra Crash
Meanwhile, the trial of Terraform Labs co-founder Daniel Shin is ongoing in South Korea. Shin was indicted in April by the country’s authorities for his association with Terraform Labs charged him with breaking capital-markets law, among other charges.
Shin has denied all charges brought against him and avers that the collapse of the Terra ecosystem was primarily caused by Kwon’s “unreasonable operation” of the Anchor Protocol. This decentralized lending protocol allowed users to borrow and lend the now infamous algorithmic stablecoin UST.
Shin’s lawyers also stated that he departed from the company in 2020 and should thus not be blamed for Terraform Labs’ failure.