Terraform Labs Loses US Appeal Over SEC Subpoena

The court found that the SEC followed its own rules on serving subpoenas.

AccessTimeIconJun 9, 2022 at 3:03 p.m. UTC
Updated May 11, 2023 at 4:19 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

The U.S. Securities and Exchange Commission’s (SEC) serving of Terraform Labs CEO Do Kwon at the Mainnet Conference last year in New York was legitimate, and the company must cooperate with the commission’s investigation, the Court of Appeals for the Second Circuit has ruled.

  • Kwon and Terraform Labs, the company behind the Terra blockchain, contested the subpoena's validity but lost the case in February and appealed.
  • On appeal, the court found that the SEC followed its own rules on serving subpoenas, and Terraform Labs’ counsel was not authorized to receive subpoenas.
  • The court also agreed that Kwon and Terraform Labs had enough ties to the U.S. because the company has employees based in the country and had previously indicated that 15% of users of its Mirror Protocol are located there.
  • This lawsuit is unrelated to the recent collapse of the Terra ecosystem. Nor is it related to the criminal investigation into Kwon and Terraform Labs by South Korean authorities.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.