US District Judge Jed Rakoff Rejects Requests by Do Kwon and Terraform in SEC Case

04/18/2023 06:35 • Blockchain Buzz • 133 views

On April 18th, according to court records, US District Judge Jed Rakoff rejected the requests of Do Kwon and Terraform during Friday’s hearing. Do Kwon and his company had previously requested an order to force the SEC to withdraw the documents it had requested from the defendant and Luna Foundation Guard from Singapore’s regulatory authorities. It is currently unclear which records the US Securities and Exchange Commission requests from Singapore, but Terraform is headquartered in Singapore.

US judge ruled that the SEC can request Do Kwon related case documents from Singapore regulatory authorities

Introduction

On April 18th, 2021, US District Judge Jed Rakoff rejected the requests of Do Kwon and Terraform during Friday’s hearing. The two had requested an order to force the SEC to withdraw the documents it had requested from the defendant and Luna Foundation Guard from Singapore’s regulatory authorities. This article explores the details of the case and sheds light on the implications of the judge’s decision.

Background

Do Kwon is the founder of Terraform, a blockchain-based platform that aims to revolutionize the real estate sector. Terraform held an initial coin offering (ICO) in 2018, raising around $18.7 million. However, the SEC alleges that the company violated US securities laws by failing to register its digital asset as a security.
Following a year-long investigation, the SEC filed a lawsuit against Kwon and Terraform in December 2020, accusing them of fraudulently promoting and selling unregistered securities. The defendants deny the allegations.

The Hearing

During the April 18th hearing, Kwon’s legal team argued that the SEC’s document requests from Singapore’s regulatory agencies were overly broad and intrusive. They claimed that the SEC was attempting to circumvent Singapore’s laws and regulations on data protection and privacy.
Terraform also requested that its ongoing token sale be sanctioned, as they believed it to be conducted in compliance with US laws. The SEC then countered by stating that the tokens offered for sale were unregistered securities.
However, Judge Rakoff ruled in favor of the SEC, stating that the defendants had not provided sufficient evidence to support their claims of overreach or intrusion. Additionally, the judge found that the SEC’s document requests were tailored to the scope of its investigation and were not overly broad.

Implications

The judge’s decision is significant, as it reinforces the SEC’s authority to request documents from foreign regulatory agencies in accordance with US securities laws. Additionally, it could set a precedent for future cases that involve cross-border investigations.
It also sends a strong message to cryptocurrency startups that fail to properly register their offerings with the SEC, which has been actively targeting ICOs for securities violations in recent years. The ruling suggests that the SEC is willing to take action against overseas entities that violate US laws.

Conclusion

In conclusion, Judge Rakoff’s rejection of Do Kwon and Terraform’s requests is a significant development in the ongoing SEC case against the two entities. The decision reinforces the SEC’s authority in cross-border investigations and sends a message to cryptocurrency startups that they must comply with US securities laws.

FAQs

1. What is Terraform, and what is its current situation?
A: Terraform is a blockchain-based platform that aims to revolutionize the real estate sector. It was accused by the SEC of violating US securities laws and promoting unregistered securities.
2. What was Do Kwon’s argument during the April 18th hearing?
A: Kwon’s legal team argued that the SEC’s document requests from Singapore’s regulatory agencies were overly broad and intrusive.
3. What is the significance of Judge Rakoff’s decision?
A: The decision reinforces the SEC’s authority in cross-border investigations and sends a message to cryptocurrency startups that they must comply with US securities laws.

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