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Terraform Labs Sues Over Breaching of Agency Rules

US SEC

Co-founder and CEO of Terraform Labs, Do Kwon, has decided to press charges against the US Securities and Exchange Commission (SEC) for breaking its own policies.

When Kwon was attending the Messari’s Mainnet conference as a presenter, he was served a subpoena by the Commission. He remarked that this behaviour breaks the SEC’s policies as they are required to undergo proper channels before delivering the subpoena.

According to the lawsuit, the SEC contacted with Kwon in May to discuss about Mirror Protocol’s operations and the connection that Terraform Labs has with the company. The CEO agreed to meet the SEC lawyers, having answered their questions during an interrogation that lasted for five hours. The SEC proceeded to request for documents from Terraform regarding the subject.

This situation started going out of control in September when the SEC chose to issue subpoenas for Terraform Labs and Kwon. The subpoenas were delivered to Kwon at Messari’s Mainnet via a private firm called Cavalier Courier And Process Services.

The court documents confirm that the SEC does not have jurisdiction over Terraform Labs and Kwon. The lawsuit said that “the SEC attorneys were well aware that TFL and Mr. Kwon had consistently maintained that the SEC lacked jurisdiction over TFL and Mr. Kwon, and at no time asked Dentons lawyers whether it was authorized to accept service of subpoenas.”

Additionally, one of the assistants at the conference have seen the delivery of these subpoenas when the SEC policy mandates this to be kept confidential until stated otherwise by the institution.

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