• 14 July, 2024

Federal Judge Upholds SEC’s Triumph in Terra & Do Kwon’s Legal Battle

In a recent twist in the ongoing legal saga involving Terraform Labs (Terra) and its co-founder Do Kwon, a federal judge has staunchly rebuffed multiple motions seeking reconsideration of previous orders in the U.S. Securities and Exchange Commission (SEC) lawsuit. The judge, Jed S. Rakoff, has once again aligned with the SEC, upholding the agency’s contention that Terra and Do Kwon violated the Securities Act.

According to a recent court filing, Judge Rakoff rendered a decisive order in favor of the SEC, dismissing the motions for reconsideration submitted by Terraform Labs and Do Kwon. In his determination, the judge regarded the reasons presented by the SEC in response to the defendant’s motions as valid and having substantial merit.

Terra and Do Kwon had sought the court’s reconsideration of its earlier decision, which rejected the opinions of expert Raj Unny concerning discovery and summary judgment. Additionally, the defendants urged the court to reassess the role of Dr. Matthew Edman in the case. Despite these pleas, the court has unequivocally denied the motions for reconsideration under Federal Rule of Evidence 702, emphasizing the significance of the Daubert Hearing, email exchanges, and interlocutory responses provided as evidence.

After partially triumphing in the Terra lawsuit, the SEC expanded its regulatory efforts by submitting additional evidence in the ongoing Binance and Coinbase legal battles. Asserting that the Terra ruling carries significance in various security violation cases, the SEC urges the court to incorporate the decisions made in the Terra lawsuit into these related proceedings.

Notably, the SEC underscored in the Terra case that it delved into the definition of an “investment contract,” effectively thwarting the defendants’ endeavors to “discard decades of settled law.” The SEC strongly emphasized clarifying that an investment contract goes beyond a mere contract, transaction, or scheme, thus highlighting the far-reaching implications of the Terra ruling on the overall legal framework.

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