Terraform Labs and the SEC have agreed to confidential documents ahead of the civil trial.

A federal judge overseeing the civil case between the US Securities and Exchange Commission (SEC) and Terraform Labs has signed a protective order to keep materials confidential ahead of trial.

In a Dec. 20 filing in the U.S. District Court for the Southern District of New York, Judge Jed Rakoff said the SEC and Terraform Labs agreed to terms approved by the court, which require the parties not to disclose materials marked confidential. All discovery records are kept confidential and will be published by the court prior to trial. At this point, it is “unlikely” the judge will approve the sealing requests, he said.

The order did not specifically state why the secret recording occurred, except where Judge Rakoff found “good cause.” Lawyers for the SEC and Terraform Labs and its co-founder Do Kwon agreed to the order on Dec. 18. Kwon is currently being held in Montenegro and awaiting extradition to the US or South Korea.

The collapse of Terraform Labs was a major event that contributed to the crypto market collapse of 2022 when the Terraform coin TerraUSD (UST) was traded against the US dollar. “Billion dollar crypto asset securities fraud” where parties offer and sell unregistered securities.

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In SEC v. Terraform's filings in the civil case could have implications for legal issues affecting many companies in the space. In August, a judge approved an order allowing Terra to subpoena FTX entities as part of the bankruptcy case of the defunct crypto exchange. Judge Rakoff accepted Jump Crypto Holdings' confidential filings with the SEC in November.

Many have criticized the SEC for its “regulatory enforcement” of crypto companies in the United States. The Commission has pending cases against Binance, Kraken, Ripple, Coinbase and others.

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