Terraform Labs and its CEO received subpoenas from the regulator in September 2021 but refused to act in accordance with the commands and filed a complaint against the SEC. A court highlighted its stance favoring the SEC and suggests the company appear and comply with the order.
An American court filed an order against Terraform Labs and its CEO, Do Kwon, to act in accordance with subpoenas that come from the SEC, the first financial regulator in the nation.
A series of files from the court revealed that a New York district judge commanded blockchain project leader Terra to heed an SEC call connected to the investigation of Mirror, a decentralized finance protocol created by Terraform Labs.
The project and its director received a subpoena sent by the entity in September last year. However, in December, Terraform filed a complaint against the SEC, and its subpoena intentions; the dispute seems to be far from reaching a conclusion.
The court filing, based on February 17, highlights that the court managed to check all of the parties’ submissions and ruled in favor of the SEC’s request, which needs Terraform Lab’s compliance with its subpoenas.
The CEO received two subpoenas filed by the SEC in September 2021 while attending the Messari conference in New York. The CEO filed his lawsuit against the regulator in response to their actions, highlighting that the subpoenas got improperly handled by the SEC. The CEO also highlighted that the agency failed to maintain its investigation in confidential status.
The main struggle for the federal agency is the Mirror protocol. The platform gives users the possibility of trading tokens that reflect the price of big US-traded stocks. The SEC still investigates whether Terraform has disrupted federal law through this protocol.
The regulator put its magnifying glass on Mirror in May last year, just months after it got launched. The SEC attorneys contacted the CEO to update him about the course of the investigation and asked for his voluntary contribution. Kwon agreed now counts on lawyers in the United States of America to watch over his interests.
According to CoinDesk, Kwon and Terraform Contributed to the SEC
The US regulator also desires to regulate the industry. However, the absence of regulatory frames is still a concern and a matter of discussion. This problem affects companies that intend to understand the policies and legal boundaries and regulators who fight for more control in the field.
Under the commandment of Gary Gensler, the SEC has been setting up an expansion of its strategies to regulate the crypto environment. But with the sector growing in a fast way, the agency then focused its efforts on the big fish. The figures and the fast growth of Terraform Labs have possibly captured the interest of regulators.
The disruptions and violation of federal securities policies are constant subjects of discussion in the SEC’s investigations and strategies to regulate the sector.
By: Jenson Nuñez
