A U.S. Judge Rules Against Terraform Labs and Former CEO Do Kwon
A U.S. federal judge has ruled in favor of the Securities and Exchange Commission (SEC) in a case involving Terraform Labs and its former CEO, Do Kwon. The court found that Terraform Labs and Kwon sold two unregistered securities: LUNA, UST, and MIR tokens. District Court Judge Jed Rakoff made this decision on December 28.
Unregistered Securities Sold by Terraform Labs
According to the court’s ruling, Kwon’s previous statements indicated that LUNA holders could expect profits from their investment, meeting the Howey test. The court also determined that the defendants caused MIR holders to anticipate profits based on Terraform’s efforts with the Mirror Protocol.
“In other words, that MIR passes the Howey test with flying colors.”
Court’s filing
SEC Lawsuit Alleges Misleading Investors
In February, the SEC filed a lawsuit against Terraform Labs and Do Kwon, accusing them of raising billions of dollars from investors through the sale of securities disguised as cryptocurrencies. The regulator claimed that Terraform misled investors about the stability of UST and falsely promised that their tokens would appreciate in value.
Do Kwon Awaits Extradition Decision
Do Kwon is currently awaiting a court decision in Montenegro regarding his potential extradition to the United States. While there were initial reports of Montenegro planning to extradite him, a recent court decision on December 19 overturned the extradition order. The final decision is yet to be confirmed by a Montenegrin court.
Hot Take: SEC Prevails in Lawsuit Against Terraform Labs and Do Kwon
A U.S. federal judge has ruled in favor of the Securities and Exchange Commission (SEC) in its case against Terraform Labs and former CEO Do Kwon. The court found that Terraform Labs and Kwon sold unregistered securities, violating securities laws. This ruling highlights the importance of compliance and transparency in the crypto industry. It serves as a reminder to investors to exercise caution when investing in cryptocurrencies and to thoroughly research any project or token before making financial decisions. The outcome of this case may set a precedent for future regulatory actions in the crypto space.
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