<\/p>\n
Terraform Labs co-founder Do Kwon has requested a United States district judge to reject the securities and fraud suit from the federal securities regulator, claiming it has failed to prove they did anything wrong.<\/p>\n
In an Oct. 27 filing<\/a> to a New York District Court, lawyers for Kwon<\/a> and Terraform argued its cryptocurrencies Terra Luna Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR) and its Mirrored Assets (mAssets) that reflect stocks on-chain<\/a> are not securities as the Securities and Exchange Commission alleged.<\/p>\n \u201cAfter two years of investigation, the completion of a discovery period that resulted in\u00a0the 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 proving that the Defendants did anything wrong,\u201d the lawyers wrote.<\/p>\n They added the \u201cevidence does not exist to support many of the SEC\u2019s claims\u201d and asserted the regulator \u201cknew some of its allegations were false\u201d \u2014 in particular, an allegation that Kwon and Terraform secretly moved millions into Swiss bank accounts for their own gain.<\/p>\n In its suit against Kwon and Terraform<\/a> filed in February, the SEC claimed the pair sent 10,000 Bitcoin (BTC) to a Swiss financial institution and withdrew $100 million. It also claimed they committed fraud by \u201crepeating false and misleading statements.\u201d<\/p>\n \u201cThe SEC knew this allegation was false when it filed this case,\u201d Kwon\u2019s lawyers wrote. \u201dThis is made even worse by the undisputed fact that TFL had no customers, and thus no customer funds.\u201d <\/p>\n The $40 billion Terra ecosystem collapsed in May 2022<\/a> after its USTC algorithmic stablecoin lost its U.S. dollar peg.<\/p>\n Related: <\/em><\/strong>Terraform co-founder Shin blames protocol for collapse during trial in S. Korea<\/em><\/strong><\/a><\/p>\n Kwon and Terraform also moved to exclude the opinion of the SEC\u2019s experts including a report from Rutgers University economics professor Bruce Mizrach which they called \u201cjunk science.\u201d<\/p>\n Judge Jed Rakoff, who oversees the case, denied Terraform\u2019s earlier attempt<\/a> to toss the lawsuit.<\/p>\n Kwon is currently detained in Montenegro<\/a> and has previously asked the court to reject the SEC\u2019s motion<\/a> to extradite and interview him in the U.S.<\/p>\n