SEC Seeks Summary Judgment in Case Against Do Kwon and Terraform

The Terra ecosystem finds itself in a precarious position, with prices of its native tokens, Terra (LUNA) and Terra Classic (LUNC), experiencing a notable decline of over 4% and 2%, respectively, in the past 24 hours. This downturn has left investors apprehensive about further involvement in Terra’s cryptocurrency offerings.

The backdrop of this market turbulence is the ongoing legal battle between Terra and Do Kwon against the SEC. The SEC has requested summary judgment in its complaint against Terraform Labs (TFL) and Do Kwon. The regulatory body’s recent actions raise questions about their strategy, especially considering Terra’s defense claiming a lack of substantial evidence supporting any wrongdoing.

Can SEC’s Summary Judgement Claim on Terra Case Backfire? 

The SEC has made a bold move, filing for summary judgment against Terra and Do Kwon. This step could bypass a lengthy trial, as the SEC argues there’s little dispute over crucial facts. However, the core of their case revolves around the claim that Kwon and Terraform Labs sold securities, a point they believe aligns with the Howey test—a critical measure in determining investment contracts and securities under U.S. federal law. 

The SEC maintains that Terraform and Kwon not only engaged in fraudulent behavior but also disseminated misleading information. This includes allegedly deceiving investors about the stability of UST and falsely attributing their algorithm for price stabilization while secretly orchestrating third-party intervention. This move by the SEC carries significant weight in the ongoing case, with potentially far-reaching implications.

Terra’s Defence is Also Noteworthy!

Do Kwon’s defense team recently make a similar plea, contending that the SEC hasn’t effectively demonstrated their case that securities were offered? Kwon remains in Montenegro, serving a sentence for document forgery related to forged passports.

Even though Terra denies all the claims made by the SEC, Terraform co-founder Daniel Shin, on trial in South Korea, distances himself from the company’s collapse, placing the blame on Kwon’s alleged mismanagement.

On their part, Terraform Labs and Kwon have consistently denied these accusations, asserting their innocence. They have also questioned the SEC’s legal basis and interpretation of events. Their Motion for Summary Judgment contends that after a comprehensive two-year investigation, the SEC has failed to produce concrete evidence of them offering or selling “investment contracts.” This legal battle is intensifying, with both sides firmly maintaining their positions.

To be Continued…

But the blame game continues in the Terra saga. Co-founder Daniel Shin’s lawyer points fingers at Kwon for the Anchor Protocol’s failure. Meanwhile, Terra lays the blame squarely on Citadel Securities, accusing them of deliberately destabilizing TerraUSD in 2022. These conflicting narratives further complicate the ongoing legal battle.