Terraform Labs CEO Sues SEC

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Cryptocurrency firm co-founder Do Kwon believes the Securities and Exchange Commission violated its privacy policy when it served him with a subpoena through a conference attendee Messari Mainnet.

The head of the company supporting the blockchain Terra, during a speech at the Messari Mainnet conference as a speaker, received a subpoena from the SEC, which was delivered by one of the event participants. Do Kwon believes that in serving him the subpoena, the Commission ignored the formal procedures for serving a subpoena and violated the rule of confidentiality of the investigation.

In a lawsuit that the head
filed at the SEC, it says the Commission invited Kwon to its office in May to testify about the activities of the cryptocurrency company Mirror Protocol and its ties to Terraform Labs. The CEO met voluntarily with SEC lawyers and answered all their questions within five hours.

The Commission then asked Terraform to voluntarily provide documents on joint activities with the Mirror Protocol. The company refused to provide documentation. Negotiations between Terraform and the SEC lawyers stalled, and the Commission in the course of the investigation authorized the subpoena to be submitted to the head of Terraform Labs of Cavalier Courier And Process Services at the Messari Mainnet conference. In a lawsuit against the Commission, Kwon argues that the SEC has no legal basis to investigate Terraform Labs.

“SEC lawyers were well aware that the TFL and Mr. Kwon argued that the SEC had no jurisdiction over the TFL and Mr. Kwon. They didn’t even bother to ask Dentons lawyers if they were authorized to take the subpoena. ”

In addition to this, the lawsuit states that the SEC violated its own nondisclosure rules about the company being investigated. The subpoena was publicly served and at least one Messari Mainnet attendee witnessed the incident. This is contrary to the SEC’s policy that matters related to an investigation must be kept confidential until needed. The claim contains a request to invalidate the summons, as well as to compensate for the incurred and further damage, including attorney’s fees in the course of this case, if the court deems it appropriate.

The Ripple company has repeatedly appealed to the court in connection with the illegal actions of the SEC. Earlier this month, the company accused the Commission of not acknowledging or denying the facts presented by Ripple in the legal proceedings. A month ago, the court rejected Ripple’s request to obtain data on the transactions of the Commission’s employees using the XRP cryptocurrency. Before that, the head of Ripple said that the US Securities and Exchange Commission is waging an open war with the crypto industry.

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