A US judge has ruled that collapsed crypto firm Terraform Labs and its founder Do Kwon offered and sold two digital assets as unregistered securities.
The U.S. Securities and Exchange Commission (SEC) and Terraform Labs have both requested summary judgment in an ongoing fraud case.
The SEC alleges that the company and Kwon facilitated a multi-billion dollar fraud and violated federal securities laws.
District Judge Jed S. Rakoff sided with the SEC’s request for summary judgment in terms of the regulator’s claims that Kwon and Terraform Labs owned the project’s native token, LUNA, and its decentralized finance (DeFi) token Mirror Protocol (MIR) as unregistered. effects.
However, Rakoff sided with Terraform Labs on the SEC’s allegations that the company offered unregistered security-based swaps, dismissing that charge.
The judge also denied both parties’ requests for summary judgment on the fraud claims, which will be decided at a jury trial currently scheduled for January 24.
Kwon was arrested by authorities in Montenegro in late March for using a fake Costa Rican passport, although he argued in court that he obtained the passport through a legitimate agency.
At the time, Montenegro was reportedly considering extraditing Kwon to the US. The country’s Justice Minister, Andrej Milovic, would rather send Kwon to the US than to South Korea, which also wants to prosecute the Terra founder.
Both countries want him extradited to face fraud charges related to the May 2022 collapse of the $40 billion Terra ecosystem.
After a court in Montenegro approved Kwon’s extradition to both countries, Kwon appealed the ruling. After winning the appeal, the Court of Appeal ordered a new trial at the Basic Court of Podgorica, as a judge refused to hear Kwon’s arguments.
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