Lawyers for Terraform Labs chief Do Kwon have filed a petition to a U.S. court requesting that the charges brought by the SEC be dismissed.
stated in February that Kwon orchestrated multi-billion-dollar securities fraud. However, according to the lawyers, the SEC failed to prove that the matter fell within U.S. jurisdiction. The products cited by the Commission were “available to the world and intended not only for Americans,” noted representatives of TFL’s co-founder.
The TerraUSD (UST) stablecoin of the collapsed Terra platform does not fall under the agency’s jurisdiction, as it is a currency, not a security.
«Congress did not grant the SEC the authority to regulate the digital assets at issue in the case», the lawyers said.
According to Do Kwon’s representatives, the company did not conduct any public offerings of securities that would have required SEC registration.
According to the report by a South Korean media outlet, the local court also did not recognise the native token of the Terra ecosystem — Terra (LUNA) — as a security.
«On the basis of the evidence presented by the indictment, it is hard to argue that LUNA falls under the definition of financial investment products regulated by the Capital Markets Act», the ruling says.
On 23 March, Montenegrin police arrested Do Kwon, who was attempting to fly out of Podgorica airport to Dubai using forged documents.
The arrest followed requests from the U.S. authorities, Singapore and South Korea. Earlier media, citing Seoul prosecutors, reported that he is hiding in Serbia.
On March 29 it emerged that Kwon will appear before a Montenegrin court ahead of extradition. He has already been charged with using a forged passport.
The U.S. Attorney’s Office for the Southern District of New York pressed charges against the co-founder of TFL.
In April, investigators discovered illicit assets linked to Terraform Labs worth $314 million. According to the investigation, Do Kwon sent 9 billion won ($7 million) to the law firm Kim & Chang over several months before the collapse of the ecosystem.