Terra seemed to have moved on from the earlier iteration’s collapse, with law enforcement searching through the rubble for clues. Do Kwon, the project’s founder, is at the core of the investigation as he tries to fight a war on multiple fronts.
Do Kwon, Terra’s co-founder, is facing one of the most difficult tests in crypto history as he tries to steer Terra 2.0 to success while handling many lawsuits in various jurisdictions. Terraform Labs was recently shaken by a decision by a US Court of Appeal to uphold a district court’s ruling ordering the company to comply with an SEC investigation subpoena.
The verdict implies that US regulators may have a broader scope of authority over the South Korean firm. The court based its decision on Terra’s “purposeful and substantial” actions in the United States.
“I find that both Kwon and Terraform Labs are subject to specific personal jurisdiction because they willfully took advantage of the privilege of doing business in the United States,” the court ruled. “I think it’s telling that there are personnel in the United States, including the general counsel.”
The ruling, according to David Shargel, a partner at Bracewell, has the potential to “either stimulate a class-action litigation in the United States or really pour some water on plaintiff’s lawyers.” It’s safe to assume that Do Kwon is ready himself for an avalanche of criminal and civil cases in the United States as a result of the ruling.
Terraform Labs is being investigated by the Securities and Exchange Commission (SEC) to see if it violates any securities laws in marketing TerraUSD (UST). Do Kwon stated he was completely unaware of the probe.
- “We are not aware of any SEC probes into TerraUSD at this time – we’ve received no such communication from the SEC and are not aware of any new investigation outside that involving Mirror Protocol,” Kwon said in a statement.
