The Second Circuit—one of the thirteen United States Courts of Appeals—has ordered Terraform Labs and its CEO Do Kwon to comply with subpoenas deemed to be a part of an SEC investigation. As such, the apex US regulatory agency is looking into whether the company’s crypto tokens are illegal unregistered securities not.
Terra’s Kwon and Co. in trouble?
On 8 June, a 10-page summary order was released where a three-judge panel rejected the defendants’ side of the argument w.r.t. how the SEC failed to comply with federal laws and lacked jurisdiction to regulate the Terra exec and his decentralized finance company.
The defendants, as such, have time and again asserted that Kwon is a South Korean citizen living in Singapore. Per the judges, however, the SEC did not essentially cross the line, for Terraform Labs has a customer and investor base in the US.
Kwon and Terraform Labs had also asserted that the apex US regulatory body violated its regulations by hand-serving him a notice without obtaining special permission from his counsel. In the latest order, the judges rejected those allegations by stating that Kwon had acknowledged that his counsel was not authorized to be served.
Per the panel, Kwon’s attorney—at first—contacted the SEC. Post that Kwon, however, failed to cooperate with the requests to provide documents and answer questions. Only after attempts at voluntary compliance failed, did the SEC serve Kwon the subpoenas.
Towards the end of the 10-page summary order, the judges stated,
“… we conclude that the district court properly granted the SEC’s application for an order requiring compliance with the investigative subpoenas and we AFFIRM the order of the district court.”
Do Kwon’s plate—at the moment—is full, for a host of other investigations by regulators from across the world are going on against his company and him. Additionally, rekt investors of LUNA and UST are also at his recovery plan’s mercy to get re-compensated for their lost funds. Amidst all the already existing chaos and clutter, catering to comply with subpoenas only adds to Kwon and Co.’s burden.