Court Orders Terra’s Do Kwon to Comply with SEC Subpoenas
The SEC’s investigation focuses on Mirror Protocol, a DeFi platform for trading synthetic assets.
- A New York court has ordered Terraform Labs CEO Do Kwon to comply with the SEC's investigation into Mirror Protocol.
- Kwon first received two subpoenas from the SEC in September 2021 as he attended the Messari mainnet conference in New York.
- Mirror Protocol's listing of synthetic securities is likely the reason for the SEC's investigative subpoenas.
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A district judge has ordered Terraform Labs CEO Do Kwon to comply with the Securities and Exchange Commission’s investigative subpoenas into Mirror Protocol.
Kwon Ordered to Comply
The SEC is moving forward with its Mirror Protocol investigation.
Court documents revealed Thursday that a New York district judge has ordered Terraform Labs CEO Do Kwon to comply with the Securities and Exchange Commission’s investigation into Mirror Protocol.
The filing, dated Feb. 17, states that the court has “reviewed all the parties’ filings” and ruled on the SEC’s application for an order requiring Terraform Lab’s compliance with its investigative subpoenas. The document states:
“For the reasons stated on the record at the February 17, 2022 conference, the SEC’s application is GRANTED, and Terraform and Kwon are hereby ordered to comply with the above-referenced subpoenas.”
The Terraform Labs CEO was first served two subpoenas by the SEC in September 2021 as he attended the Messari mainnet conference in New York. In response, Kwon returned by issuing his own lawsuit against the U.S. regulator, asserting that the two subpoenas were “improperly issued and served by the SEC,” while also citing the SEC’s failure to keep confidential its investigation into Mirror Protocol.
Kwon’s lawsuit also contests the SEC’s subpoenas on the basis that he is not an American citizen and that Terraform Labs is headquartered in Seoul. However, the recent court filings suggest that Kwon’s countersuit may have been unsuccessful, as the court appears to have ruled in the SEC’s favor.
Mirror Protocol is one of several DeFi applications created by Terraform Labs running on the Terra blockchain. The protocol allows users to create fungible tokens that track the price of real-world assets. For example, users can create, buy, sell, and enter leveraged positions on synthetic commodities such as gold and silver, as well as synthetic assets listed on the New York Stock Exchange, such as Apple and Tesla shares.
As NYSE-listed shares are classed as securities and regulated by the SEC, their listing on Mirror Protocol is likely why Terraform Labs has received investigative subpoenas for a case against Mirror Protocol.
Disclosure: At the time of writing this piece, the author owned LUNA and several other cryptocurrencies.