A recent court filing stemming from the Southern District of New York reveals that a US district judge has ordered crypto startup TerraForm Labs to comply with Securities and Exchange Commission (SEC) subpoenas. During the second week of November 2021, the US regulator filed a summons enforcement action against TerraForm Labs and the startup’s CEO, Do Kwon.
US regulator favors New York judge with investigative summons plea
On February 17, 2022, United States District Judge J. A court order signed by Paul Oetken details that startup Terraform Labs must comply with the SEC’s investigative subpoena. In mid-November last year, the SEC filed subpoenas that attempted to coerce Terraform Labs and its CEO. do kwon To comply with “fact-finding checks”.
The investigation is due to TerraForm Lab’s Mirror Protocol, an application launched in 2020 that allows users to trade mirrored assets tied to the price of US securities. The SEC wants Terraform Labs and Kwon to explain why the court “should not compel them to produce the documents required by subpoenas and force Kwon to appear for testimony.”
In October, a month before enforcement action by the SEC, Terraform Labs and Kwon revealed they were suing the US regulator for subpoenaing CEOs at a conference in New York. Terraform Labs (TfL) and Kwon insisted that the SEC lacked jurisdiction over the companies and that the summons were not served through the proper channels. The lawsuit against the SEC states:
SEC attorneys were well aware that TfL and Mr. Kwon had consistently stated that the SEC lacked jurisdiction over TfL and Mr. Kwon, and never asked Denton’s attorneys whether it would accept service of subpoena. is authorized.
New York Judge: ‘Terraform and Kwon are hereby ordered to comply with the summons referred to’
Despite the lawsuit against the SEC, last Thursday, Judge J. Paul Oetken of the Southern District of New York ordered TfL and Kwon to comply with the regulator’s subpoena. After the court reviewed all filings between the two parties and heard oral arguments by telephone conference, Otken gave his wishes to the SEC.
“For the reasons set out on record at the February 17, 2022 conference, the SEC’s application is approved, and Terraform and Kwon are hereby ordered to comply with the subpoenas referred to above,” Oetken’s order explains. Court filing adds:
This order has been stayed for 14 days to give further information regarding possible adjournment pending any appeal of this order.
The Mirror Protocol is still operational today and is the fifth largest decentralized finance (DeFi) protocol on the Terra blockchain today. At the time of writing, Synthetix Protocol has a total value locked (TVL) of $587.34 million for on-chain price exposure to real-world assets. The SEC accused TFL and Kwon of participating in the “creation, promotion and offer to sell assets and MIR tokens to US investors.”
What do you think of a New York judge’s court order for TfL and Doo Kwon ordering them to comply with the SEC’s investigative subpoena? Let us know what you think about this topic in the comment section below.
image credit: Shutterstock, Pixabay, WikiCommons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell any products, services, or companies, or a recommendation or endorsement of any products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use or reliance on any materials, goods or services mentioned in this article .