SEC Asks Court for Summary Judgement Against Do Kwon, Terraform

The request follows a move by Kwon's defense team to do the same.

AccessTimeIconNov 3, 2023 at 4:31 a.m. UTC

The Securities and Exchange Commission (SEC) is asking a federal judge for a summary judgment – saving everyone the spectacle of a full trial – because it says there is "no genuine dispute as to any material fact" in its case against Do Kwon and Terraform Labs.

"There is no dispute that purchasers made an investment of money, either through fiat currency or crypto assets," the SEC wrote in its filing, which continues to rehash the regulator's argument that Kwon and Terraform sold securities.

The filing says that money being pooled in a common enterprise with the expectation of profits predominantly from the efforts of the promoters satisfies the Howey test and warrants judgment in favor of the SEC. The Howey test is a legal test used to determine whether a transaction qualifies as investment contract and can be considered a security under U.S. federal law.

Terraform and Kwon also engaged in fraudulent conduct and made misleading statements, the SEC reiterated in the filing, re-emphasizing that they committed fraud by deceiving investors about the stability of UST, falsely crediting their algorithm for its price stabilization while secretly arranging third-party intervention, making their claims about the algorithm's efficiency misleading and materially omitting crucial information. Terra collapsed in May last year, destroying billions of dollars in investor wealth.

All this comes days after Kwon's defense team filed a similar document asking the court to side with them as the SEC, in their opinion, hasn't managed to prove they were offering securities.

Kwon remains in Montenegro, where he is serving a sentence for document forgery after being caught in an airport with fake passports.

Recently, Terraform co-founder Daniel Shin, on trial in South Korea, attributed the failure of Terraform Labs to former Kwon's mismanagement, asserting his own separation from the company and its activities two years prior to its collapse.

Edited by Omkar Godbole.


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