SEC seeks summary judgment in Terraform Labs case

The U.S. Securities and Exchange Commission (SEC) направила a petition in the Southern District of New York for a summary judgment in the suits against Terraform Labs (TFL) and its founder Do Kwon.

“There is no doubt that investors invested money either in fiat currency or in crypto assets,” the document states.

Thus the SEC paraphrased the argument that unregistered securities were offered. In the regulator’s view, the evidence points to Kwon’s role in deceiving investors by creating and promoting Terra and the LUNA tokens.

“No reasonable jury could conclude that Kwon bears responsibility for Terraform’s violations,” the agency clarified.

The SEC notes that pooling money into a common enterprise with an expectation of profits predominantly from the efforts of others satisfies the Howey test and ensures a ruling in the agency’s favour.

Earlier in the proceedings, TFL and Kwon подали a similar motion. The filing indicates that the Commission failed to prove that the company offered securities.

“After two years of investigation, a completed disclosure period during which more than 20 testimonies were taken and more than two million pages of documents and data were exchanged, the SEC did not move an inch toward proving that the defendants did anything wrong,” Terraform representatives said.

In February, the SEC filed charges against Do Kwon for securities fraud. The agency included LUNA and algorithmic stablecoin TerraUSD (UST) among the latter.

Later the Commission amended the complaint, stating that the founder of Terraform Labs conducted fake transactions for the partner payments platform Chai.

As previously explained, Kwon’s lawyers described the UST collapse as a “coordinated short attack” involving FTX. They also sought information from the bankrupt exchange as part of their defense in the SEC litigation.

In October, TFL linked the collapse of LUNA and UST to Ken Griffin’s Citadel Securities and demanded the disclosure of documents concerning its trading activity in May 2022.