The United States Securities and Exchange Commission (SEC) has rejected the jury’s verdict on Terraform Labs’ alleged violations and is now seeking a summary judgment on all the claims.
The SEC’s stance was made evident in a court filing dated October 27, where they expressed dissatisfaction with the jury’s leniency towards Do Kwon’s alleged involvement in the fraudulent activities that ultimately led to the collapse of the Terra ecosystem.
The court filing, submitted in the U.S. District Court for the Southern District of New York, emphasized the SEC’s belief that Kwon should be held accountable for Terraform’s violations of Exchange Act Section 10(b) and Rule 10b-5 under Exchange Act Section 20(a).
According to the SEC, the evidence they have presented indicates Kwon’s role in misleading cryptocurrency investors by promoting Terra and its in-house Terra LUNA tokens as securities.
On the same day, Do Kwon and Terraform Labs requested that the judge dismiss the SEC’s lawsuit, arguing that Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and its mirrored assets (mAssets) should not be considered securities as the SEC had alleged.
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Nevertheless, the SEC maintains that Kwon and Terraform Labs not only offered and sold securities but also conducted unregistered transactions involving LUNA and MIR, engaged in transactions with mAssets, and committed fraud.
While Terra’s co-founder, Daniel Shin’s lawyer, attributed the collapse of the Terra ecosystem to the “unreasonable operation of the Anchor Protocol and external attacks carried out by Do-hyung Kwon,” the company recently shifted blame onto market maker Citadel Securities.
Terra accused Citadel Securities of participating in an alleged “concerted, intentional effort” to cause the depeg of its TerraUSD (UST) stablecoin in 2022.
In response, Citadel Securities issued a statement to Cointelegraph, calling Terra’s motion “frivolous” and asserting that it was based on false social media posts.
Citadel Securities also emphasized that they had already provided information confirming their lack of involvement in the matter.
In summary, the SEC has challenged the jury’s decision regarding Terraform Labs’ alleged violations, and both parties continue to engage in legal battles over whether Terra’s assets should be classified as securities, while the blame for the Terra ecosystem’s collapse is shifting between internal and external factors.
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