Lawyer Do Kwon: The SEC accuses Do Kwon of securities fraud with Terraform Labs without basis

According to reports, the lawyer for Do Kwon, former CEO of Terraform Labs, stated that the SEC’s lawsuit accusing Do Kwon of securities fraud with Terraform Labs Pte is unfounded, partly because the stable currency in question is a currency rather than a security. The lawyer stated in his request to the judge to dismiss the lawsuit that US law prohibits regulatory agencies from using federal securities laws to assert jurisdiction over the digital assets in this case.

Lawyer Do Kwon: The SEC accuses Do Kwon of securities fraud with Terraform Labs without basis

1. Introduction
2. Background of the case
3. SEC’s lawsuit against Do Kwon and Terraform Labs
1. Allegations of securities fraud
2. Terra stablecoin and its role in the lawsuit
4. Legal arguments in favor of Do Kwon
1. Terra stablecoin is not a security
2. Jurisdictional issues under US law
5. Conclusion
6. FAQs
# Article:
Do Kwon, the former CEO of Terraform Labs, has been accused of securities fraud by the US Securities and Exchange Commission (SEC). However, his legal team is fighting back and stating that the SEC’s lawsuit is unfounded.
In his request to dismiss the lawsuit, Do Kwon’s lawyer argued that the allegations of securities fraud are baseless. Additionally, he stated that the digital asset at the center of the lawsuit, Terra stablecoin, is not a security.
The case has raised several legal questions, including jurisdictional issues under US law. To understand the case better, let’s dive deeper into the details.

Background of the Case:

Terraform Labs is a blockchain technology company that aims to develop a decentralized platform for stablecoins. Its flagship product, Terra stablecoin, is a cryptocurrency designed to be pegged to the US dollar.
The company raised $32 million in a private token sale in 2018, with investors including Binance Labs and Polychain Capital. However, the SEC alleges that the company engaged in securities fraud by misleading investors about the true nature of the investment.

SEC’s Lawsuit Against Do Kwon and Terraform Labs:

The SEC filed a lawsuit against Do Kwon and Terraform Labs in January 2021, alleging that they violated federal securities laws. The SEC claims that the company marketed its token sale as a securities offering to raise funds for the development of its blockchain platform.
However, the SEC argues that the true purpose of the token sale was to fund the development of the Terra stablecoin, which is not considered a security under US law. The SEC alleges that Terraform Labs misled investors by failing to disclose this information accurately.
In response, Do Kwon’s lawyer has asked the federal judge to dismiss the lawsuit on the grounds that the SEC’s allegations are baseless.

Legal Arguments in Favor of Do Kwon:

Do Kwon and his legal team are challenging the SEC’s lawsuit on two main points: the Terra stablecoin is not a security, and the SEC lacks jurisdiction under US law.

Terra Stablecoin is Not a Security:

The definition of a security under US law includes investment contracts, stock, and bonds. The SEC has argued that the Terra stablecoin is an investment contract that falls under the definition of a security.
However, Do Kwon’s lawyer has disputed this claim, stating that the Terra stablecoin is not a security. He argues that the digital asset is a currency since its primary function is to serve as a medium of exchange.
The lawyer further emphasized that the Terra stablecoin was not intended to generate profits for investors. Instead, its purpose was to enable fast and low-cost transactions in the Terra ecosystem.

Jurisdictional Issues Under US Law:

Do Kwon’s legal team is also challenging the SEC’s jurisdiction over the case under US law. The lawyer argues that the SEC is trying to exert control over a digital asset that is not considered a security.
US law prohibits regulatory agencies from using federal securities laws to assert jurisdiction over non-security digital assets. As the Terra stablecoin is not considered a security, the SEC lacks jurisdiction to pursue a securities fraud case against Do Kwon and Terraform Labs.

Conclusion:

The SEC’s lawsuit against Do Kwon and Terraform Labs has led to a legal battle that raises several questions regarding the definition of securities and jurisdictional issues under US law.
Do Kwon’s legal team is fighting back by arguing that the allegations of securities fraud are unfounded since the Terra stablecoin is not a security. Furthermore, they claim that the SEC lacks jurisdiction over the case under US law.
The outcome of the case is uncertain, and it will be interesting to see how the courts interpret the legal issues raised by the lawsuit.

FAQs:

1. What is Terra stablecoin, and how does it work?
Terra stablecoin is a cryptocurrency designed to be pegged to the US dollar. Its primary function is to serve as a medium of exchange in the Terra ecosystem, enabling fast and low-cost transactions.
2. Why did the SEC file a lawsuit against Do Kwon and Terraform Labs?
The SEC alleges that Do Kwon and Terraform Labs engaged in securities fraud by misleading investors about the true nature of the investment in their token sale.
3. What are the legal arguments in favor of Do Kwon?
Do Kwon’s legal team is challenging the allegations of securities fraud by arguing that the Terra stablecoin is not a security and that the SEC lacks jurisdiction under US law. They claim that the digital asset is a currency, and its primary function is not to generate profits for investors.