SEC Wins Legal Battle Against Terra's Do Kwon Over Singapore Records
The U.S. Securities and Exchange Commission (SEC) has scored a major victory in its lawsuit against Terraform Labs and its co-founder and CEO Do Kwon. A U.S. judge has denied Kwon's request to block the SEC from accessing certain documents related to Terra's operations in Singapore. These documents could reveal more details about how Kwon ran the Luna Foundation Guard (LFG) and whether he committed fraud and sold unregistered securities.
The SEC filed a lawsuit against Terraform Labs and Kwon in February 2023, accusing them of orchestrating a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin called Terra USD (UST) and other crypto asset securities. The SEC alleged that Terraform and Kwon misled investors about the stability of UST, which was supposed to be pegged to the U.S. dollar, but depegged and crashed in May 2022. The SEC also claimed that Terraform and Kwon offered and sold investors other crypto asset securities, such as mAssets, security-based swaps that mirrored the price of U.S. stocks, and LUNA, the native token of Terra's blockchain.
Kwon tried to prevent the SEC from obtaining documents from the Monetary Authority of Singapore (MAS), the country's financial regulator, which had records of LFG, a crypto organization that was created to maintain UST's peg. Kwon argued that the SEC's request was an abuse of power and violated his privacy rights. However, U.S. District Judge Jed Rakoff rejected Kwon's argument and granted the SEC access to the documents at a hearing on Friday.
This is a significant setback for Kwon, who is facing multiple legal challenges in the U.S. and South Korea. In addition to the SEC lawsuit, Kwon is also facing a class-action lawsuit from investors who lost money in UST and LUNA. Moreover, South Korean prosecutors have revealed that Kwon transferred $7 million to a local law firm right before Terra's collapse, raising suspicions of money laundering. Kwon reportedly has no discernible property in South Korea and is hiding in Singapore.
What does this mean for Terra's future? Will Kwon be able to defend himself against the SEC's allegations? How will this affect the crypto industry as a whole? These are some of the questions that investors and regulators are asking as they watch this case unfold.
Source: SEC Claims Victory As Do Kwon Fails To Block The Regulator From Accessing Singapore Files
Key Takeaways
- The SEC has won a legal battle against Terra's Do Kwon over Singapore records.
- The SEC can seek documents from MAS that could shed more light on how Kwon ran LFG and whether he committed fraud and sold unregistered securities.
- Kwon is facing multiple legal challenges in the U.S. and South Korea over Terra's collapse.
