Do Kwon Challenges SEC’s Jurisdiction in Multibillion-Dollar Crypto Securities Fraud Case

Attorneys defending the co-founder of Terraform Labs, Do Hyeong Kwon, besides known arsenic Do Kwon, person presented their statement that says the U.S. Securities and Exchange Commission (SEC) has nary jurisdiction successful the matter. The ineligible squad asserts that U.S. instrumentality precludes regulators “from utilizing national securities instrumentality to asseverate jurisdiction implicit the integer assets successful this case.”

Terraform Labs Co-Founder’s Legal Team Claims SEC Lacks Jurisdiction Over Digital Assets successful Terra Case

As per Bloomberg, Kwon’s lawyers person filed a question to disregard the lawsuit, citing that the SEC’s lawsuit relies connected outdated regulations and that the agency’s explanation of integer assets arsenic securities is acold from clear. In fact, Patrick McHenry (R-NC), the House Financial Services Committee chairman, precocious expressed that determination is “a large woody of uncertainty” regarding the SEC’s enforcement actions. Kwon’s lawyers capitalize connected this ambiguity to asseverate that the SEC’s effort to categorize each cryptocurrencies arsenic securities falls short.

Kwon’s lawyers stated:

The SEC’s improper assertion of powerfulness present by trying to shoehorn each cryptocurrencies into its explanation of a ‘security’ fails.

Kwon faces charges by the SEC of starring “a multibillion-dollar crypto-asset securities fraud” filed successful mid-February 2023. The SEC alleged that the stablecoin terrausd (UST) and Terra’s token LUNA were “unregistered securities” and that Kwon had created a suite of mirrored assets that replicated the worth of U.S. stocks, which were utilized connected the now-defunct defi level Mirror.

This suit is not the archetypal clip Kwon and the SEC person crossed paths. The SEC had antecedently served Kwon with a subpoena successful 2021 implicit the Mirror protocol, and Kwon had sued the SEC implicit its deficiency of jurisdiction. In November 2021, the SEC attempted to compel Kwon with subpoenas, seeking documents from Terraform Labs. Six months later, the once-stablecoin UST depegged, starring to the colossal collapse of the Terra blockchain ecosystem.

Kwon presently is successful custody successful Montenegro aft his arrest connected March 23 for possessing mendacious identification. He is astatine hazard of extradition by instrumentality enforcement officials from the U.S. and South Korea implicit the Terra ecosystem’s illness and transactions involving its autochthonal assets, UST and LUNA. According to a caller report, Kwon had paid $7 cardinal to a apical instrumentality steadfast successful South Korea earlier the Terra ecosystem’s collapse.

What bash you deliberation volition beryllium the result of the ineligible conflict betwixt Do Kwon and the SEC? Share your thoughts astir this taxable successful the comments conception below.

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