Challenging Jury’s Verdict
The US Securities and Exchange Commission (SEC) is appealing the recent Terraform Labs verdict. According to reports, the commission is requesting a summary judgment on all of the claims made by the defendants.
In a court filing dated October 27, the regulator expressed dissatisfaction with the jury’s decision regarding Do Kwon’s involvement in the alleged fraudulent activities. The SEC claims that Kwon, Terra’s founder, was involved in deceptive practices that contributed to the Terra ecosystem’s collapse.
The filing stated that the judge’s decision that Kwon was not responsible for Terraform’s violations of Exchange Act Section 10(b) and Rule 10b-5, as outlined in Exchange Act Section 20(a), is not supported by factual evidence. The SEC’s investigation centers on Kwon’s alleged misrepresentation of Terra and its governance tokens as securities, misleading cryptocurrency investors.
The ongoing court case represents a turning point in the legal proceedings as the SEC continues its push for accountability in the Terraform Labs case.
Do Kwon And Terra Counter SEC’s Claim
Meanwhile, Do Kwon and Terraform Labs filed a motion to dismiss the SEC’s lawsuit in less than 24 hours after the top US regulator filed the lawsuit. They asked the judge to discard the regulator’s allegations, claiming that TerraClassicUSD (USTC), Terra Classic (LUNC), mirrored assets (mAssets), and Mirror Protocol (MIR) are not securities as declared by the SEC.
However, the commission responded by maintaining its position that Kwon and Terraform Labs were involved in the offering and selling of securities assets. They also claim there were unregistered transactions involving LUNA and MIR, as well as dealings with mAssets, all of which the financial watchdog believe were fraudulent.
The legal tussle embodies the conflicting views on the nature of these digital assets. Kwon and Terraform Labs argue that the assets in question do not qualify as securities, but the SEC is convinced otherwise.
Different Takes On The Issue
As the legal battle over the Terra ecosystem fallout rumbles on, various parties are blaming each other for their alleged roles in the incident. According to Terra co-founder Daniel Shin’s lawyer, the collapse resulted from unreasonable activities of the Anchor Protocol and external attacks orchestrated by Kwon.
Meanwhile, Terra recently shifted the blame to market maker Citadel Securities, accusing the firm of taking part in an intentional move to cause the TerraUSD (UST) stablecoin to lose its USD backing in 2022. Citadel Securities responded, stating that the unfounded motion was based on false social media posts that ignored information the company provided and that it had no role in this matter.
Nevertheless, observers see the ongoing conflict regarding the Terra ecosystem collapse as a test of the justice system. The various parties involved are giving different versions of what happened before the collapse.
Moreover, the court will now carefully examine the evidence and arguments presented by all parties to determine the actual cause of the Terra ecosystem’s demise and assign penalties accordingly. The crypto community is closely following the ongoing case due to its significance, and the outcome could have far-reaching consequences for the broader cryptocurrency industry.
A side consequence of the court’s final verdict is that it would influence how such assets are regulated.