The Securities and Exchange Commission (SEC) has requested a summary judgment from a federal judge, seeking to avoid a full trial. The SEC’s argument is that there is no significant dispute regarding essential facts in their case against Do Kwon and Terraform Labs.
The SEC’s filing asserts that there is clear agreement that individuals invested money, whether in fiat currency or cryptocurrency and continues to reiterate the regulator’s position that Kwon and Terraform sold securities.
According to the filing, the pooling of money in a common enterprise with the expectation of profits primarily from the efforts of the promoters meets the requirements of the Howey test, which is a legal benchmark used to determine if a transaction qualifies as an investment contract and falls under the category of a security as per U.S. federal law.
The SEC also underscores that Terraform and Kwon were involved in fraudulent activities and made deceptive statements. They emphasize that these actions included deceiving investors about the stability of UST, falsely attributing its price stabilization to their algorithm while secretly arranging third-party intervention. This made their claims about the efficiency of the algorithm misleading and omitted crucial information. Terra suffered a collapse in May of the previous year, causing substantial losses for investors.
This development follows Kwon’s defense team’s recent filing, which asked the court to support their argument that the SEC has not convincingly demonstrated that Kwon and Terraform were offering securities.
Notably, Kwon is currently serving a sentence for document forgery in Montenegro after being apprehended at an airport with counterfeit passports.
Additionally, Terraform co-founder Daniel Shin, who is facing trial in South Korea, attributed Terraform Labs’ failure to Kwon’s mismanagement, asserting his own disassociation from the company and its activities two years before its collapse.