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Terraform Labs CEO Do Kwon Is Suing SEC

Do Kwon is the co-founder and CEO at Terraform Labs. This company supports the Terra blockchain ecosystem. Kwon was subpoenaed while he was presenting at Messari’s Mainnet conference. He stated that this was against the SEC policies and that they had to follow proper channels to deliver the subpoena.

Do Kwon is the co-founder of Terraform Labs and the CEO of Terraform Labs. He was responsible for the creation and design of Terra, a smart-contracts-enabled cryptocurrency. Do Kwon sued the SEC in a matter that occurred during Messari’s Mainnet conference. He was in discussions with the SEC regarding possible actions against Mirror Protocol. This decentralized app tracks stock prices for synthetic assets.

According to the lawsuit, Kwon was contacted by the SEC in May to discuss Mirror Protocol and the connection between Terraform Labs and the company. Kwon spoke with the SEC lawyers involuntarily, and answered all their questions over a five-hour interview. Terraform was then requested by the SEC to produce documents on this subject.

Kwon’s lawyers and the SEC had been arguing for a while. In September, the SEC decided to issue subpoenas to Terraform Labs and Kwon, while still in conversation with Terra’s parties. This was done using a private company called “Cavalier Courier and Process Services” to deliver the subpoenas at Messari’s Mainnet.

Illegal Procedures

Court documents show that the SEC does not have jurisdiction over Terraform Labs or Kwon.

The lawsuit states 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.

The lawsuit also states that the SEC violated its own rules regarding handling these incidents. One of Messari’s Mainnet assistants witnessed the subpoenas being served publicly. This is contrary to the policy of the SEC that these formal matters should remain confidential unless otherwise stated by the institution.

The lawsuit requests that the subpoenas be deemed null and damages, including attorney fees, be sought by the court.