• 18 June, 2024
Market News

SEC Vs. Terraform Labs Lawsuit Faces Crucial Summary Judgment Proceedings

In a significant update on the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs, the court has recently set dates for crucial summary judgment-related proceedings. The court proceedings, as of November 14, 2023, include a telephone conference where all relevant counsels were present. The possibility of an extended deadline for summary judgment replies to November 20 looms pending any rulings made during the Daubert hearing.

The Securities and Exchange Commission (SEC) sought a summary judgment from a federal judge, opting to bypass a full trial to avoid a spectacle, as it asserted there was “no genuine dispute as to any material fact” in its case against Do Kwon and Terraform Labs.The filing reiterated the regulator’s argument that Kwon and Terraform had sold securities. The SEC, in its filing, stated,

There was no dispute that purchasers had made an investment of money, either through fiat currency or crypto assets.

The court, presided over by Judge Jed S. Rakoff, has scheduled key hearings and summary judgment proceedings for this week, marking a pivotal moment in the case. A minute entry from a court filing reveals that the proceedings may witness an extension of the summary judgment reply deadline to Monday, November 20, contingent upon any rulings made during Friday’s Daubert hearing.

The Daubert hearing, a critical aspect of the legal process, provides an open-court platform for both parties to scrutinize the credibility of challenged experts and assess the admissibility of their testimony. Co-founder Do Kwon and Terraform Labs are at the forefront of this legal showdown, each party submitting motions for summary judgment.

The SEC contended that Terraform Labs, led by Do Kwon, played a central role in the creation of the Terra blockchain and associated crypto asset securities. The lawsuit alleged that the defendants marketed crypto assets such as LUNA, wLUNA, and UST as securities, participating in the public offering of LUNA. Moreover, the SEC asserted that Terraform Labs misled investors about Chai and depegging events in 2021 and 2022 while directly selling LUNA and MIR in public trading markets.

The embattled cryptocurrency platform recently found itself embroiled in complex legal battles on two fronts – one in the United States and another in South Korea. In the US, Terraform Labs and its co-founder, Do Kwon, are vigorously contesting allegations put forth by the U.S. SEC regarding their involvement in a multi-billion dollar crypto asset securities fraud.

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