Do Kwon Terra Luna and his company Terraform Labs were eventually barred from court appeals in the case Mirror Protocol against the Securities and Exchange Commission (SEC) in the United States. The SEC is on track to summon Do Kwon to court as a witness.
This was revealed in a document published by United States Court of Appeals for the Second Circuit, New York, Wednesday (8/6/2022).
The document is a response to an appeal filed by Do Kwon as CEO of Terraform Labs Company through his attorney last year. Terraform Labs is a company that develops a blockchain application, Mirror Protocol.
It started in September 2021. At that time, Do Kwon on behalf of Terraform Labs attended the Messari 2021 Mainnet conference in New York. He was present as one of the speakers at the event.
Before he went on stage a number of officers from the SEC sent a memo to Do Kwon asking him to testify for alleged violations of securities regulations in the US regarding the use and application of the Mirror Protocol.
Mirror Protocol itself is a blockchain application that trades shares in the form of crypto tokens based on the value of shares on stock exchanges in the United States.
The SEC considers it a violation of securities regulations in the US and again not a few US citizens use it and it is conducting a thorough investigation.
At that time Do Kwon was asked by the SEC to fulfill the summons as a witness in the SEC investigation regarding the alleged violation of the Mirror Protocol.
“The subpoena is part of the SEC’s investigation into whether Do Kwon and Terraform Labs violated federal and securities laws regarding the creation, promotion and offer to sell various digital assets associated with the Mirror Protocol,” the document reads.
Until finally the SEC concluded that Terraform Labs violated the rules and sued the company in court.
However, Do Kwon rejected the summons and sued the SEC back in December 2021, because he considered the agency to have no jurisdiction over him, including the company he founded. Do Kwon is a South Korean citizen and his company was founded in Singapore.
Do Kwon also mentioned at the time that the SEC lawyer who filed the lawsuit did not get permission from the commissioner to summon Kwon. Thus the call is invalid.
Since the court previously defended the SEC’s position in the lawsuit, Do Kwon filed an appeal to strengthen his lawsuit against the SEC. So, the latest court documents confirm that Do Kwon and Terraform Labs cannot appeal the case and state that the SEC is in line with existing regulations for pursuing the lawsuit.
“The SEC is granted the right to continue the lawsuit against Terraform Labs, because it is in accordance with existing regulations. In addition, Terraform Labs and Do Kwon are hereby ordered to comply with the subpoena,” the document reads.
Do Kwon Terra LUNA Sues SEC
Reported from CoindeskDecember 2021, at the end of May 2021, two weeks after the SEC announced its investigation into the Mirror Protocol, SEC lawyers contacted Do Kwon by email and asked for cooperation in testifying.
Kwon finally agreed and hired a lawyer in the US to represent him. According to Kwon’s attorney, between May and September 2021 Kwon and Terraform voluntarily cooperated with the SEC, including participating in a five-hour video interview on July 8, 2021, in which Kwon was asked to provide details about the creation and structure of the Mirror Protocol Mirror.
Through his lawyer, Kwon also showed the documents requested by the SEC. On September 15, 2021, Kwon’s attorneys said they were notified by the SEC that, although the SEC found no conclusive evidence of violations of US securities laws, the investigation could only be completed through enforcement action.
On September 17, 2021, SEC attorneys issued and signed two subpoenas, one for Do Kwon and one for Terraform Labs, which were then presented to Do Kwon on September 20, 2021, when he would participate in a panel discussion at the Messari 2021 Mainnet conference in New York. .
On October 22, 2021, Kwon and Terraform Labs filed a civil lawsuit in New York against the SEC, accusing the SEC of falsely making two subpoenas on September 20, 2021. He also claimed that the SEC did not have proper jurisdiction over Kwon or Terraform Labs, and requested court to cancel the subpoena and end the investigation.
In response, the SEC filed a separate lawsuit in the same court (Southern District of New York) on November 12, 2021, asking the court to compel Kwon and Terraform Labs to comply with the subpoena.
The SEC also denied having made the subpoena incorrectly. They also claim that he has legal jurisdiction, as Do Kwon is currently in the United States and US citizens are allowed to use the app.
On December 17, 2021, more than a month after the SEC’s application was filed, attorneys for Kwon and Terraform Labs responded, denying the SEC’s claim that the subpoena was properly executed and asking the court to dismiss him outright. [ps]