Federal Judge Sides With SEC In Case Against Do Kwon And Terraform Labs

December 29, 2023 5:01 pm Comments

On Thursday, a federal judge ruled that disgraced cryptocurrency entrepreneur Do Kwon, alongside his company Terraform Labs, was in violation of U.S. law for not registering its cryptocurrencies before their major demise in 2022.

Judge Jed Rakoff in Manhattan ruled in favor of the  SEC in its case against Terraform Labs.

The SEC, however, didn’t get a clean sweep in the rolling.

Judge Rakoff ruled against the SEC claims that Terraform Labs “illegally offered security-based swaps.”

Per Reuters:

A federal judge ruled on Thursday that cryptocurrency entrepreneur Do Kwon and his company Terraform Labs violated U.S. law by failing to register two digital currencies that collapsed in 2022.

U.S. District Judge Jed Rakoff in Manhattan sided with the Securities and Exchange Commission in its case stemming from the implosion of the TerraUSD and Luna currencies.

Rakoff also denied summary judgment to both sides on the SEC’s fraud claims, which will proceed toward a scheduled Jan. 29, 2024 trial. He dismissed SEC claims that the defendants illegally offered security-based swaps.

Kwon, a South Korea native, has also been charged with fraud by U.S. prosecutors in Manhattan.

He has been fighting extradition to the United States from Montenegro, where he was arrested in March several hours before the criminal fraud charges were announced.

Kwon had designed TerraUSD, a “stablecoin” designed to maintain a constant $1 price, and Luna, a more traditional token whose value fluctuated but was closely linked to TerraUSD.

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