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Do Kwon Loses US Appeal Over SEC Subpoena
Summary: The U.S. Securities and Exchange Commission’s (SEC) subpoena of Do Kwon, Terraform Labs’ co-founder and CEO, at the Mainnet Conference in New York last year was deemed legitimate and he must now cooperate with the SEC’s investigation, according to a filing from the Court of Appeals for the Second Circuit. The SEC is investigating Terraform ...
The U.S. Securities and Exchange Commission’s (SEC) subpoena of Do Kwon, Terraform Labs’ co-founder and CEO, at the Mainnet Conference in New York last year was deemed legitimate and he must now cooperate with the SEC’s investigation, according to a filing from the Court of Appeals for the Second Circuit.
The SEC is investigating Terraform Labs’ Mirror Protocol, a decentralized finance (DeFi) platform which creates synthetic stocks that mirror the price of major U.S. firms and are minted and traded on the blockchain. In other words Mirror Protocol allows users to buy, sell and trade synthetic stocks that mirror the likes of Amazon, Tesla and Disney stocks on the blockchain without the need for a traditional stock brokerage.
In October of 2021, the SEC served Kwon a subpoena, which he then reacted by suing the SEC, claiming the subpoenas were improperly served and issued. In addition, Kwon argued in his December 2021 filing that the SEC doesn’t have jurisdiction over him nor his company as he is South Korean and his company is based in Singapore.
In February of this year, a filing revealed that a U.S District Court judge in New York ordered Terraform Labs and its CEO, Kwon, to comply with the October subpoenas the SEC issued. Kwon responded to that by appealing. Now we have reached a final verdict that requires the CEO to cooperate with the SEC.
In short, the Court of Appeals for the Second Circuit ruled that the SEC followed its own rules on serving subpoenas and that Kwon and his company have enough ties to the U.S. because the company employs U.S.-based employees and roughly 15% of Mirror Protocol users are located in the U.S.
This lawsuit is unrelated to the recent collapse of the Terra ecosystem, which saw its stablecoin decrease from its $1 peg down to mere pennies in the course of less than a week, nor the criminal investigation into Kwon and Terraform Labs being carried out by the South Korean authorities.
Kwon has not tweeted about the appeal denial since it happened, but instead has talked about the Terra 2.0 ecosystem.
Author: Tyler Irvin
