According to recent court documents, the attorneys for Do Kwon, the founder of the defunct cryptocurrency issuer Terraform Labs, have asked a United States court to dismiss charges levied against him by the Securities and Exchange Commission (SEC), in part because the regulatory body lacks the right jurisdiction.
Do Kwon’s Legal Tussle
U.S. law enforcement accused Kwon of defrauding cryptocurrency investors in a 12-page indictment that was made public later last month. According to the lawsuit Kwon deceived “individuals about aspects of the Terra blockchain, including its technology and the extent to which it had been adopted by users.”
However, in response, Kwon’s attorneys argued that the SEC was unable to prove that it had personal jurisdiction over Kwon because the products referenced by the regulator were “available to the world and not directed at persons in the United States.” The allegations that have been hurled against them are categorically refuted throughout the 47-page report.
Terra Calls UST A Currency
In addition, the biggest ace in the hole is the UST stablecoin, which the Kwon legal team contends is a currency and not a security. As a result, the Kwon team concludes that the collapse of the Terra ecosystem falls outside of its jurisdiction. While the SEC argues that UST is a security because it could be used to buy LUNA, the Kwon team was quoted as saying:
The SEC has not previously asserted that something is a security merely because it can be used to buy something else the SEC calls a security.
Although this has come as a shocker to the financial watchdog, it will still be an uphill task for the Kwon’s lawyers to prove that UST is in fact a currency and not an unregistered crypto security.
Kwon is still being investigated for criminal fraud by authorities in the United States, and in South Korea, as he’s currently accused of violating laws governing financial markets. Both nations have put forward requests to have the former executive extradited to their jurisdictions so that they can initiate rightful legal proceedings.
In the wake of this news, the price of LUNA gained by 3.11% in the past 1 hour in contrast to an increase of 2.07% recorded over the past 24 hours. It is currently exchanging hands at $1.38 at the time of writing.
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