The United States Securities and Exchange Commission (SEC) subpoena served to the Terraform labs and its CEO, Do Kwon has been found to be in order by the second circuit court. Do Kwon claimed the SEC lacked Jurisdiction over his company and filed an appeal.
Court throws out Do Kwon’s arguments
The US court of Appeals for the Second Circuit has ruled that Terraform labs must cooperate with the SEC subpoenas which seek to investigate Terra’s Mirror Protocol, a DeFi platform that allows users to create and trade “mirrored assets,” or mAssets, which are unregistered securities that represent popular stocks like Apple and Amazon.
Both arguments presented by Do Kwon’s Lawyers were overturned by the court, the court stated that the SEC followed the rules and that Terraform’s counsel was not authorized to receive filings, which was why he was served in person at the Messari Mainnet Conference.
The second argument of jurisdiction was also thrown out of court, the judgement read “Appellants purposefully availed themselves of the U.S. by promoting the digital assets at issue in the SEC’s investigation to U.S.-based consumers and investors.”
Other arguments were outrightly concluded to have no merit. This lawsuit also has no relation with Terra’s recent crash.
Tether’s CTO, Paolo Ardoino on Terra’s Collapse
In a recent interview with Kitco News, Tether’s chief technology officer (CTO), Paolo Ardoino, was of the opinion that the setup of the Terra (LUNA) ecosystem played a huge role in the crash of its native tokens.
In what he called ‘a recipe for disaster’ Paolo blamed Terra founders for creating the UST stablecoin and backing it with a cryptocurrency saying the eventual crash of the whole system was just inevitable.
The chief technology officer had previously said during a Twitter Space when the crash first occurred that Terra was most likely attacked by someone bigger than it due to its weakness.
Meanwhile South Korean law enforcement agencies are investigating Do Kwon’s Terraform Labs. 280,000 of South citizens were found to have been impacted by the drastic fall of UST and Luna.