Terraform Labs, Do Kwon file motion to dismiss SEC lawsuit

Terraform Labs and its co-founder Do Kwon filed a motion for summary judgment with a national court, asking the justice to disregard the SEC’s securities fraud suit against it.

Terraform Labs collapsed successful May 2022 aft its autochthonal token LUNA mislaid 99% of its worth erstwhile the linked algorithmic stablecoin UST mislaid its peg to the dollar. The lawsuit caused much than $60 cardinal successful losses for investors and has led to lawsuits successful aggregate countries, including South Korea and the U.S.

Kwon was arrested successful Montenegro successful 2023, wherever helium is presently serving a four-month condemnation for the usage of forged documents. Both the U.S. and South Korea are seeking extradition truthful helium tin beryllium prosecuted for his relation successful the collapse.

Motion to dismiss

Terraform argued successful the filing that the SEC had failed to beryllium that Terraform Labs was selling securities oregon committing fraud. The institution claims that the regulator has provided nary grounds to backmost immoderate of the allegations made successful the lawsuit.

According to the filing:

“After 2 years of investigation, the completion of a find play that resulted successful the taking of much than 20 depositions, and the speech of implicit 2 cardinal pages of documents and data, the SEC is evidentiarily nary person to proving that the defendants did thing wrong.”

Additionally, the institution raised concerns astir the regulator utilizing an investigation conducted by a Rutgers University economics prof arsenic the ground for its suit arsenic it is “conceptually and methodologically flawed.”

The Mizrach Report — named aft the writer Bruce Mizrach — claims that the UST re-peg successful 2021 was caused by the enactment of a “Trading Firm” that was successful concern with Terraform Labs.

However, Terraform argues that the SEC has nary admissible grounds to enactment this claim. The institution further stated:

“Some of the SEC’s analytical modeling, peculiarly with respect to Professor Mizrach’s opinions, output specified absurd results that they are the benignant of “junk science” that has been repeatedly condemned by the Supreme Court and the Second Circuit.”

It is unclear whether the question — filed with Judge Jed Rakoff of the U.S. District Court for the Southern District of New York — volition beryllium granted. Terraform’s erstwhile effort to person the lawsuit dismissed was unsuccessful.

Terraform co-founder trial

Meanwhile, the proceedings of Terraform Labs co-founder Daniel Shin began successful South Korea connected Oct. 30. Shin is facing charges of amerciable fundraising and violating superior marketplace laws.

Shin denied each charges against him and said the illness was chiefly caused by Kwon’s “unreasonable” absorption of Anchor Protocol — a DeFi lending protocol that allowed users to get and lend UST.

Shin defended himself by stating that helium severed ties with Kwon backmost successful 2020 and, therefore, should not beryllium blamed for the nonaccomplishment of the Terra ecosystem.

The station Terraform Labs, Do Kwon record question to disregard SEC lawsuit appeared archetypal connected CryptoSlate.