US Securities and Exchange Commission (SEC), Terraform Labs co-founder and CEO Do KwonHe demanded an order that compelled .
According to the SEC, Terraform Labs Mirror Protocol “reflects” the price of U.S. securities and obtains “management tokens.” mAssetmay potentially violate federal securities laws by offering or selling unregistered securities.
In addition to acting as an unregistered “broker” or dealer, there were also allegations of participating in securities transactions by an unregistered investment firm, clearing outside a national securities exchange. However, despite being repeatedly subpoenaed for investigation, Terraform Labs failed to comply with Kwon’s obligations to testify and did not provide any documents.
Bloomberg“Without any legitimate basis, defendants Terraform Labs and Kwon refused to provide documents, and respondent Kwon refused to testify in response to two subpoenas…(They) should not be allowed to hinder the Commission’s investigation,” the SEC said in a statement to the federal court.
Terraform Labs Sues SEC
Both individual defendant Do Kwon and Terraform Labs filed suit against the SEC last month, suing the commission by filing subpoenas in New York City to sue the SEC rules and defendant’s individual rights under the U.S. Constitution.
“The SEC does not address its failure to comply with its own rules, nor does it deny filings whether it has received a specific order for authorization service in the DO,” Bloomberg reported. Ultimately, the court will decide whether the SEC acted properly.”
This is not the first time that a similar situation has occurred, and it has been seen before that baseless arguments have been made to support the SEC unregistered securities stance. While Terraform Labs is determined to stay out of the “regulatory black hole,” Ripple It also protects the risk of finding it in the depths of territorial waters.