SEC argues that the evidence presented to the court has nothing to do with Terraform Labs case.
Terraform Labs and its founder, Do Kwon, represented by law firm Dentons, got embroiled in a lawsuit with the US Securities and Exchange Commission (SEC).
A dispute over dismissing the lawsuit arose when Dentons submitted additional documents, which the SEC's attorneys deemed insufficient to warrant dismissal.
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During a June 15th court hearing, Dentons sought to strengthen its case for dismissal by introducing additional documents. The hearing aimed to clarify whether Terraform Labs' digital assets align with the "investment contract" definition and should be classified as securities.
Dentons is firm that UST, as an algorithmic stablecoin, is not a security. They argue that its utility outweighs its role as an investment contract. To bolster the case, the lawyers presented additional documents, including a hearing transcript from the US House Financial Services Committee on digital asset regulation, the SEC's restraining order request against Binance.US, and Hinman emails from the SEC vs. Ripple lawsuit.
The SEC's legal team maintains that the newly presented evidence does not apply to the case. They argue that TerraUSD (UST) meets the Howey test criteria for an "investment contract," thus categorizing it as a security.
The defense emphasized a "regulatory gap" concerning digital assets' categorization as securities. They critiqued the SEC's reliance on internal emails regarding "investment contracts" to determine security status, arguing this exceeds the bounds of securities law.
The presiding judge, Jed Rakoff, stated that a verdict on the motion to dismiss will be announced by July 14th.
In the meantime, Montenegro's Basic Court in Podgorica has granted bail for Kwon and former Terra CTO Han Chang-joon. Kwon is currently in extradition custody in Montenegro as the court deliberates over South Korea's extradition request for the Terra founder.
