Kwon and Terraform Labs ask a judge to throw out the SEC’s lawsuit

Terraform Labs co-founder Do Kwon has asked a U.S. district judge to dismiss securities fraud charges from the federal securities regulator after he failed to prove wrongdoing.

During an Oct. 27 filing in New York District Court, lawyers for Kwon and Terraform argued that the cryptocurrency Terra Luna Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR) and its mirrored assets (mAssets) reflect shares—not securities, according to the Securities and Exchange Commission. .

“After a two-year investigation that resulted in the seizure of more than 20 documents and the expiration of discovery periods and the exchange of more than two million pages of documents and information, the SEC is no closer to proving that the defendants actually did anything. They are wrong,” the attorneys wrote.

“There is no evidence to support most of the SEC's claims,” ​​the regulator said, adding that it “knew some of the allegations were false” — specifically that Kwon and Terraform secretly funneled millions into Swiss bank accounts for their own benefit. .

In its February indictment against Kwon and Terraform, the SEC alleged the pair sent 10,000 Bitcoin (BTC) to a Swiss financial institution and spent $100 million. He also said they committed fraud by “repeating false and misleading statements”.

“When the SEC filed this charge, it knew that this charge was false,” Kwan's lawyers wrote. “This is made worse by the indisputable fact that TFL had no customers and no customer money.”

The $40 billion tera ecosystem collapses in May 2022 if the USTC algorithm loses its stablecoin US dollar peg.

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Kwon and Terraform moved to exclude the opinions of SEC experts, including what Rutgers University economics professor Bruce Mizrach called “dirty science.”

Judge Jed Rakoff, who is presiding over the case, has rejected Terraform's earlier attempts to throw out the suit.

Kwon is currently in custody in Montenegro and previously asked the court to deny the SEC's request to extradite him and allow him to be interviewed in the US.

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