According to recent court filings, lawyers for Do Kwon, the founder of defunct cryptocurrency publisher Terraform Labs, have asked a United States court to dismiss charges brought against him by the Securities and Exchange Commission (SEC). This comes after the legal team representing Kwon claimed that the regulatory body did not have the legal jurisdiction to pursue their lawsuit.
Do Kwon’s legal battle
US law enforcement officials accused Kwon of defrauding cryptocurrency investors in a 12-page indictment that was later made public last month. According to the lawsuit, Kwon “misled individuals about aspects of the Terra blockchain, including the technology and the extent to which it has been adopted by users.”
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In response, however, Kwon’s lawyers argued that the SEC could not prove it had personal jurisdiction over Kwon because the products the regulator refers to were “available to the entire world and not directed to individuals in the United States.” The allegations made against them are categorically refuted in the 47-page report.
Terra calls UST a currency
Moreover, the biggest ace in the hole is the UST stablecoin, which Kwon’s legal team claims is a currency, not a security. As a result, the Kwon team concludes that the collapse of the Terra ecosystem is beyond its jurisdiction. While the SEC claims UST is a security because it can be used to buy LUNA, the Kwon team said:
The SEC has not previously claimed that something is a security just because it can be used to buy something else that the SEC calls a security.
While this has come as a shock to the financial watchdog, it will still be an uphill task for Kwon’s lawyers to prove that UST is in fact a currency and not an unregistered crypto security as believed by the regulators .
Kwon continues to be investigated for criminal fraud by authorities in the United States and South Korea as he is currently charged with violating laws governing financial markets. Both countries have filed requests to extradite the former executive to their jurisdictions so that they can pursue lawful legal action.
In the wake of this news, the price of LUNA is up 1.11% in the last hour, as opposed to a 2.07% increase in the last 24 hours. It is currently changing hands for $1.38 at the time of writing.
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Pratik has been a crypto evangelist since 2016 and has experienced almost everything crypto has to offer. Be it the ICO boom, the bear markets of 2018, Bitcoin’s halving so far – he’s seen it all.
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