SEC files counterclaim against Terraform Labs and its CEO

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The US Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs PTE and its CEO Do Kwon in the Southern District of New York.

The lawsuit filed by the SEC concerns an investigation related to the Mirror Protocol, which the company launched in 2020. The solution allows you to create and trade mAsset digital assets that “reflect” the price of US securities and receive Mirror “Management Tokens” (MIR).

The statement said that the Commission
investigates, Have Terraform Labs and its CEO Do Kwon violated federal securities laws by:

  1. Did not register the offer or sale of securities.

  2. Selling and exchanging securities bypassing the national stock exchange, acting as an unregistered broker or dealer.

  3. Participated in transactions with securities not registered with an investment company.

Based on ongoing investigation, the SEC has reason to believe that Terraform Labs and Kwon were involved in creating, promoting and offering the sale of mAsset and MIR tokens to US investors. The filing states that the SEC sent subpoenas to Terraform Labs and Do Kwon during the investigation, requiring the company to provide certain documents and Kwon to testify. In a statement, the SEC emphasizes that despite numerous attempts to negotiate between Commission lawyers and Terraform Labs lawyers, the company refused to provide any documents, and Do Kwon did not appear at the SEC on a summons and did not fulfill his obligation to testify.

The SEC is seeking the court to comply with an order directing Terraform Labs to provide documents in the Mirror Protocol case, and Do Kwon to compel him to testify about the Mirror under the subpoena. In addition, the statement said Do Kwon must explain why he did not appear before the SEC on the subpoena.

In October, the founder of the cryptocurrency company Terraform Labs, Do Kwon, who filed a lawsuit against the US Securities and Exchange Commission (SEC), accused regulators of unreasonably harassing cryptocurrency companies.

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