In recent events, a US district judge paved the way for the Securities and Exchange Commission (SEC) to collaborate with the South Korean government. Their objective? To interview Daniel Shin, co-founder of Terraform Labs, and Do Kwon amidst allegations of crypto asset securities fraud.
The SEC Collaboration with South Korea
Judge Jed Rakoff, serving in the US District, made a pivotal ruling last Thursday. He affirmed that the SEC could employ a 1970 treaty mechanism designed specifically for international evidence collection. Interestingly, though Do Kwon rejected any accusations of wrongdoing, he chose not to oppose the SEC’s proposal.
Taking it a step further, the SEC, with the green light from Judge Rakoff, sets its sights on Chai Corp. This Seoul-based payments firm, founded by Kwon, has inevitably landed in the eye of this storm. The overarching intent? To fortify the SEC’s claims in its lawsuit against Terraform Labs and its ex-CEO.
February witnessed the SEC lodging a lawsuit against both TFL and Kwon. The gravity of the allegations? Orchestrating a colossal crypto asset securities fraud. That involves the now non-operational algorithmic stablecoin, TerraUSD, and other purported crypto securities.
Terra and Chai: A Controversial Connection:
The bond between Chai and Terra is far from straightforward. Numerous reports suggest Kwon might have magnified the depth and longevity of Terra’s collaboration with the e-commerce platform. The SEC’s revelation adds another layer of complexity. They contend that Chai Payments did not employ Terraform’s blockchain for settling transactions, contradicting the 2019 partnership agreement.
The SEC’s stance is clear: “Defendants deceitfully mirrored Chai transactions on the Terraform blockchain. The objective? To falsely present them as native to Terraform. In reality, traditional means executed these Chai transactions.”
Kwon’s troubles don’t stop at the SEC lawsuit. He faces criminal charges both in the US and South Korea. Responding to these allegations, the beleaguered executive has previously labeled the charges from his native country’s prosecutors as “driven by political agendas.”
This unfolding saga between the SEC, Terraform Labs, and associated entities underscores the complex intersections of technology, business, and international law. As the story develops, all eyes remain on the outcomes of these collaborations and the ripple effects in the crypto world.
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