What is the SEC's lawsuit against Do Kwon and Terraform Labs about?

The SEC's lawsuit against Do Kwon and Terraform Labs alleges that they engaged in securities fraud by misrepresenting their cryptocurrencies, including Terra Luna Classic and TerraClassicUSD, as non-securities. The SEC claims that Kwon and Terraform misled investors and moved substantial funds for personal gain, which they deny, asserting that the SEC has not provided sufficient evidence to support its claims.

What arguments are being made by Do Kwon's legal team?

Do Kwon's legal team argues that the SEC has failed to prove any wrongdoing on their part. They contend that the cryptocurrencies in question are not securities and that the evidence presented by the SEC is insufficient. They also claim that the SEC knowingly made false allegations regarding fund transfers to Swiss accounts and that the lawsuit lacks merit.

What was the outcome of the previous attempts to dismiss the lawsuit?

Judge Jed Rakoff, who oversees the case, previously denied Terraform Labs' attempt to dismiss the lawsuit. This indicates that the court found enough grounds for the case to proceed, despite Kwon's legal team's arguments against the SEC's claims.

How did the collapse of the Terra ecosystem impact this case?

The collapse of the Terra ecosystem in May 2022, which saw its algorithmic stablecoin USTC lose its dollar peg, is central to the SEC's allegations. The fallout from this event has led to increased scrutiny of Kwon and Terraform Labs, with regulators claiming it resulted in significant investor losses, thereby justifying their lawsuit.

What evidence does Kwon's team claim is lacking in the SEC's case?

Kwon's legal representatives assert that after extensive investigations, including over 20 depositions and two million pages of documents, the SEC has not provided credible evidence to support many of its claims. They argue that key allegations, such as fraudulent fund transfers, are unfounded and that the SEC's expert opinions lack scientific validity.

What is the SEC's lawsuit against Do Kwon and Terraform Labs about?

The SEC's lawsuit against Do Kwon and Terraform Labs alleges that they engaged in securities fraud by misrepresenting their cryptocurrencies, including Terra Luna Classic and TerraClassicUSD, as non-securities. The SEC claims that Kwon and Terraform misled investors and moved substantial funds for personal gain, which they deny, asserting that the SEC has not provided sufficient evidence to support its claims.

What arguments are being made by Do Kwon's legal team?

Do Kwon's legal team argues that the SEC has failed to prove any wrongdoing on their part. They contend that the cryptocurrencies in question are not securities and that the evidence presented by the SEC is insufficient. They also claim that the SEC knowingly made false allegations regarding fund transfers to Swiss accounts and that the lawsuit lacks merit.

What was the outcome of the previous attempts to dismiss the lawsuit?

Judge Jed Rakoff, who oversees the case, previously denied Terraform Labs' attempt to dismiss the lawsuit. This indicates that the court found enough grounds for the case to proceed, despite Kwon's legal team's arguments against the SEC's claims.

How did the collapse of the Terra ecosystem impact this case?

The collapse of the Terra ecosystem in May 2022, which saw its algorithmic stablecoin USTC lose its dollar peg, is central to the SEC's allegations. The fallout from this event has led to increased scrutiny of Kwon and Terraform Labs, with regulators claiming it resulted in significant investor losses, thereby justifying their lawsuit.

What evidence does Kwon's team claim is lacking in the SEC's case?

Kwon's legal representatives assert that after extensive investigations, including over 20 depositions and two million pages of documents, the SEC has not provided credible evidence to support many of its claims. They argue that key allegations, such as fraudulent fund transfers, are unfounded and that the SEC's expert opinions lack scientific validity.

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Do Kwon and Terraform Labs ask judge to toss SEC’s lawsuit

Q: What is the current status of Do Kwon?

Do Kwon is currently detained in Montenegro. He has requested the court to reject the SEC's motion to extradite him to the U.S. for questioning. His legal battles continue as he seeks to defend himself against the allegations made by the SEC.

August 11, 2025August 11, 2025

Terraform Labs co-founder Do Kwon has asked for a United States district judge to turn down the securities and scams suit from the federal securities regulator, declaring it has actually stopped working to prove they did anything wrong.In an Oct. 27 filing to a New York District Court, legal representatives for Kwon and Terraform argued its cryptocurrencies Terra Luna Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR) and its Mirrored Assets (mAssets) that reflect stocks on-chain are not securities as the Securities and Exchange Commission alleged.” After two years of examination, the conclusion of a discovery duration that resulted in the taking of more than 20 depositions, and the exchange of over two million pages of documents and data, the SEC is evidentiarily no closer to showing that the Defendants did anything incorrect,” the legal representatives wrote.They included the “evidence does not exist to support a lot of the SECs claims” and asserted the regulator “understood some of its accusations were incorrect”– in particular, an allegation that Kwon and Terraform secretly moved millions into Swiss savings account for their own gain.Kwons attorneys declared the SEC is trying to draw parallels in between Terraform and FTX. Source: CourtListenerIn its suit versus Kwon and Terraform submitted in February, the SEC claimed the pair sent 10,000 Bitcoin (BTC) to a Swiss banks and withdrew $100 million. It likewise declared they dedicated fraud by “repeating false and misleading statements.”” The SEC knew this allegation was false when it filed this case,” Kwons lawyers wrote. “This is made even worse by the indisputable truth that TFL had no consumers, and hence no consumer funds.” The $40 billion Terra ecosystem collapsed in May 2022 after its USTC algorithmic stablecoin lost its U.S. dollar peg.Related: Terraform co-founder Shin blames procedure for collapse throughout trial in S. KoreaKwon and Terraform likewise moved to omit the viewpoint of the SECs specialists including a report from Rutgers University economics professor Bruce Mizrach which they called “junk science.” Judge Jed Rakoff, who manages the case, denied Terraforms earlier attempt to toss the lawsuit.Kwon is presently detained in Montenegro and has previously asked the court to decline the SECs motion to extradite and interview him in the U.S.Magazine: How to protect your crypto in an unpredictable market– Bitcoin OGs and professionals weigh in

Other Questions People Ask

What are the main arguments from Do Kwon and Terraform Labs in their request to toss the SEC’s lawsuit?

Do Kwon and Terraform Labs argue that the SEC has failed to provide sufficient evidence to support its claims, asserting that their cryptocurrencies, including Terra Luna Classic and TerraClassicUSD, do not qualify as securities. In their filing, they highlighted that after extensive investigation, the SEC remains unable to demonstrate any wrongdoing by the defendants. They also contend that the SEC's allegations, particularly regarding the movement of funds to Swiss accounts, are unfounded and misleading.

How did Do Kwon and Terraform Labs respond to the SEC's allegations of fraud?

In their response to the SEC's allegations, Do Kwon and Terraform Labs stated that the claims of fraud, including the assertion that they made false statements and misled investors, are baseless. Their legal team emphasized that the SEC was aware of the inaccuracies in its allegations when it filed the lawsuit. They also pointed out that Terraform Labs had no consumers or consumer funds, further undermining the SEC's fraud claims.

What evidence did Do Kwon's attorneys present to support their case against the SEC?

Do Kwon's attorneys presented a strong argument that the evidence provided by the SEC does not substantiate its claims. They noted that after two years of investigation and extensive document exchanges, the SEC has not proven any wrongdoing by Kwon or Terraform Labs. Additionally, they criticized the SEC's reliance on expert opinions, labeling some as "junk science," which they believe lacks credibility in supporting the lawsuit.

What is the current status of Do Kwon regarding his legal battles with the SEC?

Currently, Do Kwon is detained in Montenegro as he faces multiple legal challenges, including the SEC's lawsuit. He has previously requested that the court dismiss the SEC's motion to extradite him to the U.S. for questioning. The ongoing legal proceedings highlight the complexities surrounding cryptocurrency regulation and enforcement actions taken by federal agencies like the SEC.

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