April 25, 2024
ICOs and tokens

The US Securities and Exchange Commission launched an investigation into the collapse of Terra

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The US Securities and Exchange Commission launched an investigation into the collapse of Terra

Against the backdrop of the Terraform Labs crisis and the Mirror Protocol judicial investigation, the US regulator decided to study the history of the LUNA issue in more detail.

The U.S. Securities and Exchange Commission (SEC) has officially requested the necessary information from Terraform Labs.

The legal controversy between the Terra ecosystem and the SEC began in September 2021, when Terraform Labs CEO Do Kwon was handed a regulator's summons at the Messari Mainnet conference.The commission invited the head of Terraform Labs to discuss the activities of the Terra-based platform — DeFi Mirror Protocol. The protocol made it possible to issue synthetic tokens and trade them based on shares of popular companies such as Tesla, Microsoft, and Airbnb. 

Do Kwon initially denied receiving a subpoena, but later sued the SEC himself, claiming that the subpoenas were "improperly executed and served ."In February, a New York court ordered Terraform Labs and its CEO to comply with the subpoena and appear before the SEC to testify.

Kwon then filed an appeal, which was rejected by a U.S. court on June 8, arguing that he and his company were not required to comply with the SEC's requirements to investigate the operation of the Mirror protocol.Kwon argued that Terraform Labs did not have a sufficient presence in the U.S. markets and that the subpoena should have been delivered to Terraform Labs' legal counsel, not him personally.

Upholding the February decision, the United States Court of Appeals acquitted the SEC's actions, citing Terraform Labs' numerous marketing and promotional activities to U.S. consumers, the maintenance of U.S. employees, contracts with U.S. firms, and business trips to the country related to Mirror Protocol.

As part of the ruling, Terraform Labs and Kwon must submit all documents related to the DeFi protocol and testify to the SEC.But there has been no previous mention of LUNA-related documents.

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