Do Kwon Seeks Dismissal of SEC Lawsuit After Terra Collapse

Legal Tug-of-War

Do Kwon, the co-founder of Terraform Labs, is once again in the hot seat as he urges a U.S. district judge to dismiss a lawsuit from the SEC. Claiming the SEC has flailed in proving its case, Kwon’s response shines a spotlight on the ongoing legal drama that continues to unfold in the crypto world.

The SEC’s Claims Under Scrutiny

In an Oct. 27 filing in the Southern District of New York, Kwon’s legal team argued that the SEC has misclassified their cryptocurrencies—Terra Classic (LUNC), TerraClassicUSD (USTC), along with Mirror Protocol (MIR) and its adjacent assets—as securities. According to Kwon’s lawyers, after an extensive investigation with more than 20 depositions and over two million pages of evidence, the SEC is still left holding empty hands when it comes to proving any wrongdoing.

Counterclaims and Denials

Kwon’s attorneys claim that the allegations of moving millions into Swiss bank accounts are not just wrong but sound suspiciously like a plot twist in a bad movie. They assert that claims regarding the secretive transfer of funds were false and that the SEC knew it.

Key Highlight: Kwon’s defense argues that Terraform Labs had no customers, therefore, no customer funds could be involved in any alleged fraud.

Comparisons with FTX

A curious angle in this legal saga is the SEC’s attempt to draw parallels between Terraform Labs and FTX. Kwon’s team labeled these comparisons as baseless, essentially saying, “Just because a chicken and a duck quack doesn’t mean they’re both birds of a feather.” They dismissed the SEC’s claims about the financial transfers as mere smoke and mirrors.

Coping with the Fallout from Terra’s Collapse

The crypto community still reels from the collapse of Terra ecosystem, which lost its footing in May 2022 when its stablecoin, TerraUSD (UST), fell from grace. While Kwon continues to fight this battle in the courts, the aftermath of the collapse has left many questioning the sustainability and regulatory landscape of cryptocurrencies.

The Road Ahead

The case continues with Judge Jed Rakoff presiding, who has historically been no-nonsense when dealing with legal entanglements like this. Meanwhile, Kwon remains detained in Montenegro, fighting extradition and holding on to hopes that the SEC’s case might just fade into the background.