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Terraform Labs CEO Sues SEC

Cryptocurrency firm co-founder Do Kwon believes the SEC violated privacy policy when it served him with a subpoena via a conference attendee Messari Mainnet.

The head of the company supporting the blockchain Terra, during a speech at the Messari Mainnet conference as a speaker, received a subpoena from the SEC, which was delivered by one of the event participants. Do Kwon believes that in serving him the subpoena, the Commission neglected the formal procedures for serving a subpoena and violated the rule of confidentiality of the investigation.

The lawsuit filed by the chief against the SEC says the Commission invited Kwon to its office in May to testify about the activities of the cryptocurrency company Mirror Protocol and its connection with Terraform Labs. The CEO voluntarily met with the SEC lawyers and answered all their questions within five hours. 

After that, the Commission asked Terraform to voluntarily provide documents on joint activities with the Mirror Protocol. The company refused to provide documentation. Negotiations between Terraform and SEC lawyers are deadlocked, and the Commission, in the course of its investigation, authorized the submission of a subpoena to the head of Terraform Labs of Cavalier Courier And Process Services at the Messari Mainnet conference. In a lawsuit against the Commission, Kwon claims the SEC has no legal basis to investigate Terraform Labs.

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“SEC lawyers were well aware that TFL and Mr. Kwon had argued that the SEC had no jurisdiction over TFL and Mr. Kwon. They didn’t even bother asking Dentons lawyers if they were authorized to take a subpoena. “.

In addition to this, the lawsuit states that the SEC violated its own non-disclosure rules about the company being investigated. The subpoena was publicly served and at least one Messari Mainnet attendee witnessed the incident. This is contrary to the SEC’s policy that matters related to an investigation must remain confidential until needed. The claim contains a request to invalidate the summons, as well as to compensate for the incurred and further damage, including attorney fees in the course of this case if the court deems it appropriate.

The Ripple company has repeatedly applied to the court in connection with the illegal actions of the SEC. Earlier this month, the company accused the Commission of not acknowledging or denying the facts presented by Ripple in the legal proceedings. A month ago, the court rejected Ripple’s request to obtain data on the transactions of the Commission’s employees using the XRP cryptocurrency. Before that, the head of Ripple said that the US Securities and Exchange Commission is waging an open war with the crypto industry.

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