The Securities and Exchange Commission (SEC) has petitioned a federal judge for a summary judgment, asserting there’s no factual dispute in their case against Do Kwon and Terraform Labs, aiming to avoid a full trial. The SEC’s filing reiterates the claim that Kwon and Terraform sold securities, pointing out that the pooled money in a common enterprise, expecting profits predominantly from promoters’ efforts, meets the criteria of the Howey test used to define investment contracts under U.S. federal law.
The SEC emphasized in the filing that Terraform and Kwon engaged in fraudulent conduct, making misleading statements that deceived investors about the stability of UST. They falsely attributed price stabilization to their algorithm while arranging third-party intervention, omitting crucial information and misleading investors. Terra‘s collapse last year resulted in the loss of billions of dollars in investor wealth.
This development follows Kwon’s defense team’s filing, asserting that the SEC hasn’t adequately demonstrated they were offering securities.
Kwon, currently in Montenegro serving a sentence for document forgery, was found with fake passports at an airport. Daniel Shin, co-founder of Terraform Labs, currently on trial in South Korea, attributed the collapse of Terraform Labs to Kwon’s mismanagement, stating his separation from the company occurred two years before its collapse.
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