Do Kwon and Terrraform Labs will have to testify before the SEC for illegal sale of securities in Mirror Protocol – DiarioBitcoin

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Do Kwon and Terrraform Labs will have to testify before the SEC for illegal sale of securities in Mirror Protocol - DiarioBitcoin By Hannah Perez

A court on Wednesday ordered Terraform Labs and its CEO to cooperate with the SEC in an investigation into alleged unregistered securities sales.


  • The SEC launched an investigation into Terraform in 2021.
  • The problem for regulators is the federal securities violation question in Mirror Protocol.
  • Kwon and Terraform have been ordered to cooperate with regulators.

After the dramatic implosion of land last month, the project’s troubles seem far from over.

Terraform Labs and its founder, Do Kwon, have been called to comply with subpoenas from the United States Securities and Exchange Commission (SEC) related to an investigation into MirrorProtocol.

In a ruling Wednesday, the US Court of Appeals for the Second Circuit ordered the company behind land and its director to cooperate with an investigation by regulators. the news medium The Blockk reviewed.

The investigation to Kwon and Terraform Labs dates back to 2021 and is unrelated to the recent collapse of the stablecoin UST and the token native MOON. Rather, it relates to an alleged violation of federal securities law through Mirrora decentralized finance (DeFi) platform that offered derivatives trading of synthetic stocks from the stock market.

SEC investigates unregistered sale of securities in Mirror Protocol

as reported DailyBitcointhe SEC launched an investigation to investigate whether the company had conducted an illegal sale of unregistered securities through MirrorProtocol. Regulators had served Kwon two subpoenas in September last year, while he was attending the conference on Messari In New York.

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Nevertheless, terraform and its founder did not agree and filed a motion in December opposing the SEC’s subpoena efforts. At the time, they argued that the court lacked jurisdiction due to the lack of contact between terraform with the United States. Kwon also filed his own lawsuit against the regulator, claiming that the subpoenas were “issued and notified incorrectly” by looking for him in person during the event.

This week, the court reversed both arguments and argued that the SEC was indeed following the rules. The court added that the lawyer for terraform was not authorized to receive the subpoenas, so Kwon had to be served in person. Likewise, he dismissed arguments that US authorities had no jurisdiction over the Singapore-based company.

In accordance with The Blockciting court documents, the court noted that Terraform Labs and Kwon promoted the tokens between US consumers and investors, who retained US employees and had agreements with US-based entities to exchange US tokens (pointing to a $200,000 deal with an unspecified exchange). They also said that 15% of users of MirrorProtocol are based in the US

Kwon must comply with SEC subpoena

as pointed out Ethereum World Newsthe initial ruling issued in February 2022 requested that both Do Kwon and Terraform Labs comply with the SEC subpoenas. At this weekly hearing, the court reiterated this order, asking the company and its founder to collaborate with regulators in the investigation.

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land has faced increased regulatory scrutiny since the historic fall of UST and LUNA last month. However, this investigation has nothing to do with that matter. Instead, it is part of a larger line of investigation by the SEC by Gary Gensler related to the classification of cryptocurrencies as securities.

Since December 2020, Rippl is going through a lawsuit with the agency for the sale of its token XRP. More recently, it was reported that the exchange Binance is also the subject of an investigation into an alleged violation of securities law related to the sale of his token native BNB.

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Article by Hannah Estefanía Pérez / DailyBitcoin

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WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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