The U.S. Securities and Exchange Commission (SEC) is locked in a legal battle with Terraform Labs and its former CEO, Do Hyeong Kwon, over alleged fraud. Last week, the lawyers representing Terraform Labs and Kwon filed a motion to dismiss the lawsuit brought against them by the SEC. In response, the SEC has countered with its own motion, claiming that the evidence against the company and Kwon is “clear, undisputed, and overwhelming.” The SEC alleges that Terraform and Kwon orchestrated a fraudulent scheme that resulted in $45 billion in market losses, including significant losses for U.S. investors.
On November 2, 2023, the SEC advanced its case by filing a motion for summary judgment, asserting that it has “undisputed” proof of the alleged infractions committed by Terraform Labs and Kwon. The regulatory body accuses them of fabricating Terra blockchain activity to create the appearance of real-world transactions that did not exist and lying to investors about the stability of Terraform’s stablecoin while concealing a secret deal with a third party. The SEC firmly believes that the evidence against Terraform Labs and Kwon is sufficient for a judgment in its favor and states that “no rational jury could conclude that Kwon was not liable for Terraform’s violations.” This development comes after a recent guilty verdict in a fraud trial involving former FTX CEO Sam Bankman-Fried and follows Terraform Labs and Kwon’s own motion for summary judgment seeking a quick dismissal of the case.
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