Do Kwon, CEO of Terraform Labs, is suing the US Securities and Exchange Commission.
The builder of the decentralized financial platform (DeFi) Terra has confirmed it was served an SEC subpoena at Messari’s mainnet conference last month, according to a lawsuit filed by Kwon and Terraform Labs on Friday.
The matter dates back to May 2021, when the SEC’s Enforcement Division sent an email to Kwon, according to the filing.
It’s about Terras Mirror Protocol, a decentralized financial platform (DeFi) on which synthetic stocks that reflect the price of large US companies are minted and traded.
Read more: Terra Brings 24-Hour Trading for Synthetic Versions of Stocks Like TSLA and AAPL
The subpoena requires Kwon to make a statement to U.S. regulators. As a resident of South Korea, Kwon denies that.
Terraform’s lawsuit against the SEC is unusual, but preventive legal action may be useful in this case, according to Anderson Kill attorney Stephen Palley.
“It’s a reminder to regulators that there are also codes of conduct that they must adhere to,” Palley told CoinDesk.
The SEC told Terraform attorneys that the US regulator could sue the company.
“In a conversation on September 15, 2021, SEC attorneys said they believe that some type of enforcement action against TFL is warranted [Terraform Labs] and any cooperation and implementation of remedial action in relation to the mirror protocol would result in a lower financial penalty under a consent agreement, ”the lawsuit stated.
Five days later, Kwon was served.
“The subpoenas were served publicly to Mr. Kwon: Mr. Kwon was approached by the process server when he was exiting an escalator at the mainnet summit while on his way to give a scheduled non-mirror protocol presentation “, So called the lawsuit.
It seems to confirm a tweet from Indiegogo founder Slava Rubin who claimed to witness the event:
lol I just saw a guy from the SEC being served up on the escalator in # mainnet2021 right before he went on stage for his panel
– Slava Rubin (@gogoSlava) September 20, 2021
Kwon told The Defiant’s Brady Dale later that day that he hadn’t been served.
Telegram messages sent to Kwon were not returned.
Nikhilesh De and Cheyenne Ligon contributed to the coverage.