Terraform Labs and co-founder Do Kwon have taken a significant step in their legal battle with the U.S. Securities and Exchange Commission (SEC). They have filed a motion for summary judgment, aiming to dismiss the allegations of multi-billion-dollar securities fraud leveled against them. If successful, this move could potentially save them from a lengthy trial.
In the motion, Terraform Labs and Do Kwon argue that the SEC has failed to provide sufficient evidence to support their claims. They assert,
“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.”
Taking their case to Jed Rakoff, the judge at the U.S. District Court for the Southern District of New York, Terraform Labs hopes to expedite the resolution of this legal matter. However, it is worth noting that Rakoff previously dismissed Terraform’s request to have the lawsuit thrown out. The judge sided with the SEC’s argument that there may be a “plausible claim” regarding Terraform’s potential violation of securities law. Rakoff also rejected the use of a recent ruling as precedent, which determined that Ripple Labs did not violate any securities law.
Terraform Labs finds itself at the forefront of the crypto industry’s current challenges, following a staggering $40 billion loss in 2022. The company is now engaged in a contentious battle with the SEC over critical industry concerns. The SEC sued Terraform Labs and Do Kwon after the collapse of its TerraUSD (UST) and LUNA tokens, alleging that both the Anchor Protocol and the LUNA token are “crypto asset securities”. The SEC claims that Terraform violated regulations by selling unregistered securities and security-based swaps.
While Terraform co-founder Do Kwon faces extradition requests from the U.S. and South Korea, as he is currently detained in Montenegro, his lawyers are urging the court to reject these requests. Meanwhile, the other co-founder of Terraform Labs, Daniel Shin, is facing his own set of fraud charges in South Korea.
The SEC has refrained from commenting on Terraform’s motion for summary judgment, leaving the final decision in the hands of the court.
