Terraform labs appeal rejected in Mirror protocol case, infavour of SEC

In the Mirror protocol case, Terraform labs now legally forced to support the SEC investigation.

Do Kwon is the founder of TerraForm Labs. Terraform created Terra blockchain Network but last month the whole. Crypto industry saw that Terraform Labs failed to sustain the stability of its two native tokens Luna & UST stablecoin. In the past, Terraform labs was involved in the crypto project Mirror Protocol.

According to US Securities and Exchange Commission (SEC), the involvement of Terraform Labs in Mirror protocol was a type of violation of federal securities laws. 

In February of this year, Terraform Labs’ legal team challenged a district court’s decision affirming the subpoenas. 

On 8 June, the U.S. Court of Appeals ordered the developers team Terraform Labs and its founder Do Kwon to support & comply with the SEC’s investigation into the Mirror Protocol case regarding the violation of the federal securities laws infringement allegations by Terra project team.

Document noted:

“the district court properly granted the SEC’s application,” and “properly concluded that it had personal jurisdiction over Terraform and Kwon.” In explaining its ruling…(..)…the SEC followed the rules,” and correctly served the investigative subpoenas to both Terraform and Kwon.”

Through the appeal, Terraform Labs and Kwon said that the court should not grant the SEC application because the SEC agency itself voilated its rules of practice by improperly serving the subpoenas. Terraform labs also said that hat the court lacked personal jurisdiction because Do Kwon is a resident of South Korea, not the United States.

Do Kwon and legal hurdles 

In May of this year, Terraform Labs saw collapses of the Terra ecosystem with its two native coins Luna & UST, where both the coins touched ground-level price. 

Due to such issues, many people filed cases against Terraform Labs founder Kwon. 

The majority of the people claimed that Kwon did not worked perfectly to save the two coins and that also requested to the police agency to seize property of Kwon, to give compensation to the people, who lost funds due to the collapse of Luna and UST. 

Separately, the South Korean ruling government is also doing an investigation, to figure out whether Terraform labs was fully responsible behind the collapse of Terra project or there was a mistake by the crypto exchanges, which were able to stop trading.

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