According to Bloomberg, Terraform Labs has asked a judge for permission to subpoena information from the now-defunct cryptocurrency platform FTX, stating that the information may help in its defence against fraud charges from the US Securities and Alternate Fee (SEC).
The company’s lawyers say that a coordinated assault by short sellers caused the collapse of TerraUSD and Luna, and that FTX’s affiliated trading house, Alameda Analysis, was behind the problem.
According to the SEC, Terraform and Kwon raised billions from traders between 2018 and 2022 by publicizing, marketing, and promoting unregistered cryptocurrency assets. They allegedly provided misleading information about how their blockchain operated inside a well-known Korean payment system and misrepresented the stability and potential value growth of its tokens.
Kwon is asking the U.S. Securities and Alternate Commission (SEC) to dismiss the charges against him due to the SEC’s alleged lack of jurisdiction and the assertion that the UST stablecoin in question is a foreign currency rather than a security.
While still facing criminal fraud charges in both the United States and South Korea, Kwon asserts that the digital assets of his company weren’t targeted specifically at Americans and that the SEC has no jurisdiction over them. He also claims that Terraform didn’t conduct any public offerings necessitating SEC registration.
The Terra community had a severe collapse after its algorithmic stablecoin terraUSD (UST) lost its $1 peg and plunged to 35 cents and its partner token, LUNA, fell to some cents in May 2022. Initially a promising cryptocurrency ecosystem, the Terra community had a peak market cap of $60 billion.
Despite Kwon and the Luna Basis Guard’s efforts to calm the community, the platform faced a severe lack of funding, which undermined investor confidence and ultimately led to the launch of a new blockchain, “Terra 2.0,” without a stablecoin, and the renaming of the old Terra blockchain tokens to Luna basic (LUNC).
