Terra’s Do Kwon Was Served by SEC, New Lawsuit Shows

It solves a lingering mystery of Messari’s Mainnet conference.

Oct 23, 2021 at 12:48 a.m. UTC
Updated Oct 31, 2021 at 2:47 a.m. UTC

Zack Seward is CoinDesk's deputy editor-in-chief. He holds BTC, ETH, UNI, ATOM and a couple NFTs above CoinDesk's disclosure threshold of $1,000.

Terraform Labs CEO Do Kwon is suing the U.S. Securities and Exchange Commission (SEC).

The builder of decentralized finance (DeFi) platform Terra confirmed he was served with an SEC subpoena at Messari’s Mainnet conference last month, according to a lawsuit filed Friday by both Kwon and Terraform Labs.

The matter stretches back to May, when the SEC’s Enforcement Division emailed Kwon, according to the filing.

At issue is Terra’s Mirror Protocol, a decentralized finance (DeFi) platform on which synthetic stocks mirroring the price of major U.S. firms are minted and traded.

The subpoena requests that Kwon provide testimony to U.S. regulators. As a resident of South Korea, Kwon is contesting the subpoena.

Terraform’s lawsuit against the SEC is unusual but, according to Anderson Kill lawyer Stephen Palley, preemptive legal action might make sense in this case.

“It’s a reminder to regulators that there are rules of engagement that they need to abide by as well,” Palley told CoinDesk.

The SEC told Terraform’s lawyers the U.S. regulator might sue the company.

“In a conversation on September 15, 2021, the SEC attorneys advised that they believe that some sort of enforcement action was warranted against TFL [Terraform Labs] and any cooperation, and implementation of remedial actions as to the Mirror Protocol, would result in a reduced financial sanction as part of any consent agreement,” according to the lawsuit.

Five days later, Kwon was served.

“The subpoenas were served on Mr. Kwon in public: Mr. Kwon was approached by the process server as he exited an escalator at the Mainnet summit while on his way to make a scheduled presentation that was not about the Mirror Protocol,” the suit said.

It appears to confirm a tweet by Indiegogo founder Slava Rubin who claimed to witness the event:

Kwon told The Defiant later that day that he had not been served.

Telegram messages sent to Kwon were not returned.

Nikhilesh De and Cheyenne Ligon contributed reporting.


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Zack Seward is CoinDesk's deputy editor-in-chief. He holds BTC, ETH, UNI, ATOM and a couple NFTs above CoinDesk's disclosure threshold of $1,000.

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