There was an appeal filed by Do Kwon, CEO of TerraForm Labs rejecting On June 8, a US court said he and his company needed to comply with an investigation by the Securities and Exchange Commission (SEC) into the South Korean company’s mirror protocol.
This is the latest development in the legal tension between the SEC and Kwon, which confirms a rule from february Terraform Labs and Quon must submit documents relating to the Mirror Protocol and testify to the SEC.
Mirror Protocol is a decentralized finance (DeFi) Platform built on Terra that enables users to exchange synthetic versions of stocks such as Tesla and Apple.
Kwon’s appeal was filed on the grounds that the SEC had violated its rules when it was first served a subpoena at the Messari mainnet conference in October of 2021.
The CEO of TerraForm Labs argued that his firm does not have a substantial presence in US markets. The appeal also argued that the summons should have been given to Kwon’s legal counsel and not in person.
Today, the United States Court of Appeals for the Second Circuit upheld the February decision.
It said the SEC was justified in subpoenaing Quon and Terraform Labs based on the company’s “marketing and promotion to US consumers, retention of US-based employees, contracts with US-based entities, and business trips to the US, All of which were related to the issue of digital assets in the Mirror Protocol and the SEC’s investigation.”
The court also rejected the argument that it was inappropriate to serve the papers to her in person because of her lack of compliance with an SEC subpoena given electronically.
The decision was based on several contacts within the US, including directors of special projects working for Terraform Labs, who promoted the company’s digital assets within the country, the ruling read.
The court said the trading arrangements with US companies to trade assets from the Mirror Protocol justified the SEC’s investigation, where “a $200,000 deal with a US-based trading platform” was made. In addition, Terraform Labs “indicated that 15% of its Mirror Protocol users are within the US” during the conversation.
Terra 2.0
Terraform Labs and Do Kwon have ended a particularly difficult year so far.
Today’s verdict puts pressure on the investigation after the following fall down TeraUSD (UST) and Tera’s native coin Luna. The explosion triggered commentary from regulators around World On which government officials saw stablecoins as a potentially volatile and risky asset.
Last month, TerraForm Labs cost investors billions as TeraUSD (UST) and Luna dented in value. The network’s market capitalization grew by 98% within a week from about $30 billion to about $113 million.
Shortly after, Terra Community rebooted the networkDeprecated the stablecoin and relaunched a new LUNA token (rebranding the collapsed token as “Luna Classic”).
Following the launch, the new coin dropped from $19.54 to $2.99 today, according to CoinMarketCap,
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