Terra Classic

TerraKRW

<p>The United States Securities and Exchange Commission (SEC) has taken a step forward in its ongoing case against Singapore’s Terraform Labs by seeking to question Daniel Shin, the Co-Founder of the company.</p>
<p>The SEC's intention is to gather evidence related to Chai Corporation, a payments company associated with Terraform and the Terra blockchain. District Judge Jed Rakoff granted the SEC’s request earlier this week, which is part of the regulatory body’s efforts to build a case against Terraform Labs and its Co-Founder, Do Kwon. The decision was based upon a motion originally<a href="https://www.courtlistener.com/docket/66820843/46/securities-and-exchange-commission-v-terraform-labs-pte-ltd/" rel="noopener noreferrer nofollow"> filed</a> in July.</p>
<h2 id="header-0">Requesting South Korean assistance</h2>
<p>The motion, which was granted on Tuesday, allows the SEC to reach out to South Korea for assistance in questioning Shin and obtaining documents related to Chai Corporation. The regulatory body aims to gain insights into Kwon’s role at Chai, the utilization of the Terra blockchain by Chai, and the disclosures made by Chai regarding its relationship with Terraform.</p>
<p>Additionally, the SEC is interested in understanding the reasons behind Chai’s separation from Terraform, as the two companies shared offices and staff until their split in 2020.</p>
<h2 id="header-1">No opposition filed</h2>
<p>On a<a href="https://medium.com/@coinness.gl/do-kwon-loses-fight-to-conceal-singapore-records-302adcfce73b" rel="noopener noreferrer nofollow"> previous occasion</a>, Kwon unsuccessfully challenged the SEC's attempt to access company records on the basis of a lack of jurisdiction given that Terraform is a Singapore-domiciled company. In June, both Terraform and Kwon<a href="https://medium.com/@coinness.gl/sec-opposes-motion-to-dismiss-terraform-labs-lawsuit-abcef6ff5cda" rel="noopener noreferrer nofollow"> attempted</a> unsuccessfully to have the entire action thrown out.</p>
<p>On this occasion neither Terraform Labs nor Kwon have opposed the SEC’s motion. In fact, they have even included their own set of questions and document requests. Both the Singaporean firm and its Co-Founder have denied the SEC’s allegations, which were filed earlier this year.</p>
<p>The SEC’s lawsuit claims that Terraform’s cryptocurrencies, specifically Terra Luna Classic (LUNC) and Terra ClassicUSD (USTC), were involved in fraudulent activities. The US regulatory body further alleges that Kwon and Terraform falsely promoted the use of the Terra blockchain by Chai for processing and settling transactions.</p>
<p>The SEC’s lawsuit also accuses Terraform and Kwon of fabricating transactions involving TerraKRW (KRT), a Korean won-pegged stablecoin, to give the impression that Chai was actively utilizing the Terra blockchain.</p>
<h2 id="header-2">Collapse fallout</h2>
<p>Terra, an interconnected crypto ecosystem, faced a collapse in May 2022, resulting in the loss of approximately $40 billion in value and impacting the wider cryptocurrency market. The aftermath of this collapse led to legal actions against individuals associated with Terraform Labs. South Korean prosecutors, for instance, charged Shin with multiple fraud offenses in April, alleging that he had concealed the risks of investing in Terraform’s cryptocurrencies.</p>
<p>Kwon’s legal situation is equally complex. He is currently serving a prison sentence in Montenegro for attempting to leave the country using a fake passport. He faces criminal charges in both the United States and South Korea, and both countries have requested his extradition.</p>
<p>The ongoing investigation sheds light on the intricate relationships within the Terra ecosystem, having an impact across different jurisdictions. As legal proceedings unfold, the outcome will likely have implications for the regulation and oversight of cryptocurrency and blockchain projects internationally.</p>

SEC Seeks to Question Co-Founder of Singapore’s Terraform Labs

Table of Contents

CoinNess Global

Other articles published on Aug 19, 2023

Join our free newsletter for daily crypto updates!