By Michael Scott
According to the co-founder of the currently-fallen Terraform ecosystem, Do Kwon, he and his company did not circumvent United States securities regulations.
Do Kwon, the co-founder of Terraform Labs, has urged a U.S. district judge to dismiss the fraud and securities case from the Securities and Exchange Commission, asserting the agency has not proved they were in the wrong.
Do Kwon Legal Team Request Court to Dismiss SEC Lawsuit
In an October 27 filing to a New York District Court, Terraform and Kwon’s attorneys contended that assertions by the SEC about Mirror Protocol (MIR) and its Mirrored Assets (mAssets), Terra Luna Classic (LUNC), and TerraClassicUSD (USTC) being not securities were untrue.
The attorneys wrote that following two years of inquiry, the conclusion of a discovery phase that led to the taking of more than 20 depositions, and the exchange of more than 2 million pages of data and documents, the Securities and Exchange Commission is not close to demonstrating that the respondents were in the wrong.
Additionally, they said ‘the proof to back most of the SEC’s assertions was non-existent’ and claimed the regulator ‘was aware of some of its accusations being untrue.’ For instance, a claim concerning Terraform and Kwon secretly transferring millions into Swiss bank accounts was untrue.
Former Terraform Labs Co-Founder Considers SEC Allegations Untrue
The case against Terraform and Kwon was filed in February, with the regulator claiming the two transferred 10000 Bitcoin to a Swiss bank and took $100M. The SEC also said they committed fraud by ‘repeating deceptive and untrue statements.’
Kwon’s attorneys wrote that the Securities and Exchange Commission was aware of this assertion being untrue when filing the case. This was aggravated by the undeniable fact that TFL lacked clients, translating to no client funds.
In May last year, the $40B Terra ecosystem fell following the Loss of the USTC algorithmic stablecoin’s United States dollar peg. Terraform and Kwon also sought to reject the SEC’s experts’ view concerning including a report from Bruce Mizrach, a Rutgers University economics professor.
They referred to it as ‘junk science.’ Judge Jed Rakoff rejected Terraform’s previous effort to dismiss the case. Presently, Kwon is detained in Montenegro and earlier requested the court to dismiss the Securities and Exchange Commission’s motion to deport and interview him in the United States.