Terra Legal battlefront in The US: Do Kwon And Terraform Labs Ordered To Heed SEC Subpoenas

A US Court has ordered Terra’s Do Kwon and Terraform Labs to comply with subpoenas issued by SEC.

Terra’s founder, Do Kwon, and his company, Terraform Labs, are still in legal muddy waters. Besides being investigated in South Korea, Do Kwon and TFL are now faced with another legal battlefront in the United States.

According to a recent ruling by the US Second Circuit, which is the US Federal Court of Appeal, the two entities associated with Terra are to comply with SEC subpoenas issued earlier.

SEC Was Within The Law To Serve Subpoena

The SEC issued the subpoena to Do Kwon while he was in the US attending a crypto conference in New York City back in September 2021. However, Do Kwon didn’t show up to iron out things with the SEC. The SEC wanted Do Kwon and TFL to appear before it and prove that Terra’s crypto tokens are not securities registered illegally.

A lower court issued the same order, but Kwon and TFL appealed the ruling. Now that the higher court has affirmed the decision, it will be up to Kwon and his company to decide on whether to appear before the SEC or keep running.

Back in South Korea, lawmakers have called for Kwon to appear before them and explain what led to the collapse of Terra LUNA and UST which saw over 200,000 South Koreans lose their money.

Kwon Says SEC Has No Jurisdiction

While the courts in the US say otherwise, Do Kwon says that the SEC doesn’t have any jurisdiction to investigate him and his company.

However, it’s notable that Terra’s tokens are traded all over the world, especially on exchanges – most of which have huge customer bases in the US. These include Binance.US and Coinbase.

Under US federal law, the SEC has the mandate to keep all businesses and trades happening within the US borders clean. Cryptocurrencies fit in this category. A case in point can be seen where SEC is currently involved in a legal tussle with Ripple over XRP’s status.