Do Kwon's lawyers argue that SEC cannot regulate UST as it is not security.
Do Kwon's legal team is pushing for the dismissal of Securities and Exchange Commission charges against the Terraform Labs co-founder, arguing the regulator lacks jurisdiction, according to the recent court filing.
The SEC charged the South Korean national with securities fraud in February. However, Kwon's lawyers contend that the SEC failed to establish "personal jurisdiction" in the civil case against him, as products mentioned by the SEC were "available to the world and not directed at US persons."
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Additionally, the document asserts that the stablecoin TerraUSD (UST), a digital asset involved in the case, falls outside the SEC's jurisdiction, as it is a currency, not a security.
The 47-page document, filed in a New York court, claims:
Congress has not granted the SEC the power to regulate the digital assets at issue here.
Kwon's representatives also argue that the company did not conduct any public securities offerings that would require SEC registration. It is worth noting that it is not the first time SEC Chief Gary Gensler has faced criticism over the institution's approach to crypto regulation.
Despite this motion, Kwon remains subject to criminal fraud charges by US prosecutors and charges of capital market law violations in South Korea.
Kwon, who has evaded authorities since Terraform Labs' collapse in May 2022, was arrested in Montenegro for using falsified documents while traveling. Thus before Do Kwon is extradited to either the US or South Korea, he must first stand trial and potentially face jail time in Montenegro.
The SEC has until May 12th to contest the motion to dismiss.
Do Kwon's lawyers challenge the SEC's jurisdiction in the case against him, questioning the regulator's authority to regulate the involved digital assets.
