US SEC Lawsuit Against Terraform And Do Kwon Could Be Dismissed

Top law firm Dentons, representing Terraform Labs and co-founder Do Kwon, filed additional documents in support of the motion to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). The court hearing on Thursday centered on whether digital assets created by Terraform Labs are securities under an “investment contract.”

US Judge Decision To Dismiss SEC Lawsuit Against Terra Do Kwon In July

Terraform Labs and co-founder Do Kwon’s lawyers and the US SEC lawyers filed responses to the motion to dismiss the lawsuit in the US District Court for the Southern District of New York on June 15.

Dentons lawyers, representing Terraform Labs and co-founder Do Kwon, strongly claim algorithmic stablecoin UST (now USTC) is not a security as it was designed for practical purposes rather than an investment contract. They filed additional documents to support the motion to dismiss a lawsuit. It includes the US House Financial Services Committee hearing on digital asset regulation and stablecoin issuance, the SEC request for a restraining order against Binance.US, and Hinman emails in the SEC v. Ripple lawsuit.

Lawyers mention “regulatory gap” in whether crypto assets constitute securities as the US Congress discusses regulatory frameworks for the digital asset and stablecoin issuance. Moreover, the SEC is acting outside the boundaries of securities laws and the SEC internal emails on “investment contract” to find a security.

US SEC lawyers argued the additional documents filed by the defendants don’t support the motion to dismiss the lawsuit. Moreover, Binance.US transcript and internal SEC emails have no bearing on this case. They claim Howey Test clearly indicates what constitutes an “investment contract” and UST was a security.

Judge Jed Rakoff said he will rule on the motion to dismiss the case by July 14.

In April, a South Korean court ruled that Terra Classic (LUNC) is not a security and Terra crypto assets are not “investment contracts.”

Dentons represented Do Kwon earlier to challenge the US SEC subpoena in its investigation of Mirror Protocol in 2021 and a class action lawsuit in the Singapore High Court in 2022. The law firm also represents Terra in other lawsuits. Terraform Labs and Do Kwon hired the world’s largest law firm Dentons to help deal with prosecution and investigation by US federal prosecutors.

Also Read: BinanceUS Fires Staff, Coinbase Losing Market Share to Robinhood

Do Kwon to Be Extradited to South Korea

Meanwhile, Montenegro High Court has approved the bail of Do Kwon and former CTO Han Chang-joon. However, both will remain behind bars as the High Court judge ordered them to be extradited to South Korea.

The High Court investigating judge at the request of South Korea ordered the extradition detention of Do Kwon and Han Chang-joon for six months.

The investigation of Do Kwon’s political ties with Montengro’s former Finance Minister Milojko Spajic is also undergoing.

Also Read: Binance’s BNB Chain To Announce Layer 2 Blockchain Solution

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Varinder has 10 years of experience in the Fintech sector, with over 5 years dedicated to blockchain, crypto, and Web3 developments. Being a technology enthusiast and analytical thinker, he has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers. With CoinGape Media, Varinder believes in the huge potential of these innovative future technologies. He is currently covering all the latest updates and developments in the crypto industry.

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