The Securities and Exchange Commission (SEC) has petitioned the court to force Terraform Labs and its co-founder and CEO, Do Kwon, to provide needed documents and provide testimony in response to the SEC’s previous investigation subpoenas surrounding the company’s Mirroring function.
According to the SEC, Terraform Labs’ Mirror Protocol’s mAssets that “mirror” the price of US securities and obtain Mirror’s “governance tokens” – MIR, may violate federal securities laws by making unregistered offers and sales of securities and security-based swaps outside of a national securities exchange, as well as acting as an unregistered broker or dealer and engaging in securities transactions through an unregistered investment company. Despite repeated subpoenas, Terraform Labs has declined to release any records, including those relating to Kwon’s inability to comply with the testimony duties.
“Without justification, respondents Terraform and Kwon have failed to disclose records, and respondent Kwon has refused to testify in response to two Commission summons.
They should not be allowed to obstruct the Commission’s inquiry,” Bloomberg said, citing the SEC’s lawsuit in Manhattan federal court.
Terraform Files a Complaint with the SEC
Both the individual defendant, Do Kwon, and Terraform Labs filed a lawsuit against the SEC last month, alleging that the commission violated SEC guidelines and the defendant’s constitutional rights under the United States Constitution by delivering the subpoenas at a New York crypto industry conference.
“The SEC makes no mention of the violation of its own standards, and its filings make no mention of the fact that it failed to acquire a particular order permitting service on Do.
At the end of the day, the court will determine whether the SEC behaved legally, “Bloomberg reported Terraform’s Friday remarks.”
This is not the first time the community has observed the accumulation of flimsy reasons in support of the SEC’s unregistered securities posture in a case. While Terraform Labs is adamant about avoiding the regulatory black hole, it may as well end up there like Ripple.
Also Read: The SEC Denies The VanEck Bitcoin ETF
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