A district judge in the US has ordered Terraform Labs, a crypto startup, to abide by the subpoenas of SEC. The regulator had recently filed a case in the New York Southern District court against this company and its CEO. The US regulator had issued a subpoena order against Terraform and Do Kwon, its CEO in Nov. 2021.
J. Paul Oetken, the US District Judge signed this court order on Feb. 17, 2022. The order directed Terraform to abide by the investigative subpoenas of SEC. The regulator had filed subpoenas last November asking Terraform CEO to abide by its investigation directives.
The issue was Terraform’s Mirror Protocol, a trading application introduced in 2020. This tool allows trading in a mirrored asset tied to a US security price. The regulator wants Terraform and its CEO to inform why he should not be compelled to abide by the subpoenas of SEC and provide testimony.
One month before the SEC issued this enforcement order in October, the company Terraform and its CEO had revealed the plan to sue the US regulator. The lawsuit was filed after the SEC served the CEO a subpoena during a meeting in New York.
According to Kwon, SEC does not have jurisdiction over his company. He contested the way the subpoenas were served. The case against the regulator says the attorneys of SEC knew that Terraform and its CEO had maintained that they do not come under SEC jurisdiction.
The judge in this order asked Terraform and its CEO to comply with the SEC subpoenas. The court issued this directive after reviewing all filings between the SEC and Terraform. It was followed by an oral argument through telephonic conference where the judge granted the regulator what it wanted.