- Don Kwon claims that the SEC messed up a legal procedure during their ongoing case.
- The case is regarding the Terra Mirror project that offers users synthetic stocks and other pegged assets.
Terraform Labs CEO Dan Kwon claims that the SEC mishandled their subpoenas at the 2021 Mainnet despite not having legal rights over Terra. The company is now asking a New York court to disregard those subpoenas following their claims.
Terra filed the complaint with the court to oppose the SEC’s effort to compel them into cooperating with their subpoenas. The regulator filed that motion last month after the crypto company claimed they had fouled them when serving them in September.
Terra points out an unjust treatment by the SEC during their legal tussle
Terra claims that the SEC had disregarded the official procedure while dealing with their legal case. The blockchain firm said that the SEC lawyers subpoenaed Kwon without the green light from the commissioners. Kwon’s legal counsel claims that the subpoenas should be rendered invalid since they mishandled him and were not authorized officially.
The SEC opened a case against Terra on May 7, just a few months after its rollout. The regulator seeks to determine whether the protocol has violated any federal investment rules by trading mirrored holdings. Two weeks later, the SEC lawyers contacted Kwon to cooperate in their investigations. He accepted the offer and hired his legal team.
Per his lawyers, the CEO cooperated with the regulators voluntarily between May and September. They also said that he even provided the SEC with a five-hour-long interview while explaining the structure of his project. He also offered other documents regarding the project’s governance through the lawyers.
On SEPT. 15, Kwon’s lawyers received a notification that even if the SEC did not get any conclusive evidence of foul play, the case could only end with enforcement. Two days later, the watchdog provided subpoenas for Kwon and Terra to sign. That time, Kwon spoke at Messari’s Mainnet 2021 conference. Th papers were handed to him right before he stepped on the stage.
The SEC continues to put crypto projects under the microscope
The SEC is currently busy issuing out regulations and preparing frameworks to govern the development of crypto projects. They have reviewed multiple projects, conducted investigations for others, and rejected some.
However, some projects have raised their voice to point out that the SEC did not follow the correct regulation procedure or was biased. One of those projects is XRP which said that the regulators sued them because they were a security. They also noted that the high-ranking members of the commission favour other coins like BTC and ETH, which are hurting XRP by far.
Despite these allegations, the SEC has continually said that they do not have any bad blood with blockchain technology and have no plans to ban them. The technology is necessary, but it has to be regulated to avoid causing considerable losses to its investors. The commission has continued to investigate individual projects as they wait to complete a blanket regulatory framework for the assets.