SEC pushes for summary judgment in the lawsuit against Do Kwon and Terraform Labs, emphasizing the sale of securities and a lack of material dispute.
In an attempt to save a full trial, the U.S. Securities and Exchange Commission (SEC) has asked a federal judge for summary judgement in its lawsuit against Do Kwon and Terraform Labs. The SEC emphasises that Kwon and Terraform sold securities in its argument that there is “no genuine dispute as to any material fact” in the case.
The SEC ‘s lawsuit against Kwon and Terraform Labs
It is undeniable that buyers made financial investments, whether in fiat money or cryptocurrency assets, according to the SEC’s filing. This claim supports the regulator’s contention that securities were provided by Kwon and Terraform Labs. The issue concerns whether the sold assets satisfy the requirements of an investment contract as defined by the Howey test, a legal evaluation that establishes whether a transaction meets the requirements of an investment contract and is therefore eligible to be classified as a security under U.S. federal law.
According to the SEC, the Howey test is satisfied when funds are pooled in a joint business with the expectation of returns principally generated from the efforts of promoters, which supports a ruling in the SEC’s favour.
The document emphasises the dishonest behaviour and false statements made by Kwon and Terraform. It claims that they concealed material facts, misled investors about the stability of UST, and blamed their algorithm for the price stabilisation of the company while covertly orchestrating third-party interventions. Investors incurred large losses when Terraform collapsed catastrophically in May of the previous year.
Do Kwon’s defence team has filed a similar document in response to the SEC’s motion, claiming that the SEC has not proven that they were peddling securities. Daniel Shin, a co-founder of Terraform who is currently on trial in South Korea, has claimed that Kwon’s poor management was the reason behind Terraform Labs’ demise. Two years before to the company’s demise, according to Shin, he had cut relations with it.
The Arrest of Kwon and Han in Montenegro
According to Finance Magnates, Kwon was sentenced to four months in prison by a Montenegrin court for having faked travel documents and passports. The former chief financial officer of the blockchain company based in Singapore, Han Chong-Joon, was also charged with the same offences and given the same punishment.
When Kwon and Han tried to take a private plane to Dubai in March, they were detained in Montenegro. The two executives’ forged identity cards and counterfeit Costa Rican and Belgian passports were seized, the court disclosed.
A few weeks have passed since the court first set bail at €400,000 for each of the two convicts, Han and Kwon. This sentencing follows. Nevertheless, an appeal by the prosecution resulted in an upper court nullifying the May bail order. The appeal was filed on the grounds that the property owned by the executives had not been fairly valued.
Bloomberg reports that Kwon and Han’s punishment will account for the time they spent in custody. They are also permitted to appeal the decision to a higher court by the court.
Kwon told the court he got the fake travel documents from a Singaporean agency that a buddy had suggested to him. He went on to say that he had no knowledge the documents were fake. The CEO of Terraform Labs denied knowing that the documents were false.
