Benzinga - Terraform Labs and its co-founder, Do Kwon, have approached a federal court to stand by their defense against the U.S. Securities and Exchange Commission's (SEC) allegations of fraud.
They argue that the SEC has failed to provide solid evidence that the crypto entity dealt with securities.
Terraform stated, "After two years of investigation, the completion of a discovery period that resulted in the taking of more than 20 depositions, and the exchange of over two million pages of documents and data, the SEC is evidentiarily no closer to proving that the defendants did anything wrong."
This case has garnered considerable attention, particularly in light of broader conversations surrounding the digital assets sector, akin to the subjects set to be spotlighted at Benzinga's Future of Digital Assets conference on Nov. 14.
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The tumultuous event in 2022, where Terraform, a stablecoin provider, saw a loss of $40 billion, became a pivotal point leading to many notable crypto companies facing challenges.
Terraform's TerraUSD stablecoin and its Luna cryptocurrency suffered significant setbacks, with the SEC alleging the company and Kwon participated in a large-scale fraud by selling unregistered securities, causing substantial losses to investors.
Terraform is also challenging the expert opinions sourced by the SEC for their case, highlighting the "conceptually flawed" interpretations from a Rutgers University academic.
While a prior motion to have the case dismissed was denied by Judge Jed Rakoff of the U.S. District Court for the Southern District of New York, he acknowledged that the SEC presented a "plausible claim" regarding Terraform offering investment agreements.
Thus, the case appropriately fell under the purview of the SEC's securities enforcement powers.
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