Terraform Labs and its co-founder Do Kwon are seeking to have a lawsuit from the United States Securities and Exchange Commission (SEC) thrown out.
Two entities argue that the SEC has failed to present sufficient evidence to back its claims of securities violations and fraud.
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On October 27th, legal representatives for Do Kwon and Terraform Labs filed a petition in the US District Court for the Southern District of New York.
The team contended that their suite of cryptocurrency offerings, including Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and mirrored assets (mAssets), do not qualify as securities, contrary to what the SEC asserts.
According to the legal counsel for Kwon and Terraform:
After two years of investigation, the completion of a discovery period that resulted in the taking of more than 20 depositions, and the exchange of over two million pages of documents and data, the SEC is evidentiarily no closer to proving that the Defendants did anything wrong.
They further emphasized that the SEC "knew some of its allegations were false," precisely the accusation that Kwon and his company moved millions into Swiss bank accounts. This is especially notable given that Terraform Labs had no customers, making the movement of customer funds impossible.
Earlier this year, the SEC filed charges, alleging that Kwon and Terraform Labs had transferred 10,000 Bitcoin to a Swiss financial institution and withdrawn $100 million. The agency also accused the duo of making "false and misleading statements."
In addition to petitioning for the case's dismissal, Kwon and Terraform have also challenged the credibility of the SEC's expert witnesses. They specifically criticized a report by Rutgers University economics professor Bruce Mizrach, labeling it as "junk science."
Judge Jed Rakoff, who is presiding over the case, had previously denied Terraform Labs' motion to dismiss the lawsuit. Do Kwon, who is currently detained in Montenegro, has also sought to counter the SEC's attempts to have him extradited and questioned in the United States.
Terraform Labs and Do Kwon continue to fight the SEC's allegations of fraud and securities violations. They assert the regulatory body lacks substantial evidence for its case, even after a lengthy investigation. As the case unfolds, it marks a critical juncture in the ongoing dialogue between regulatory bodies and the ever-evolving cryptocurrency space.
