Do Kwon Files Counter-Lawsuit Against SEC After Being Served At Messari’s Mainnet Conference

Terraform CEO and Co-founder Do Kwon has revealed that he has filed a counter-suit against the SEC. He also confirmed that he was served with a subpoena from the SEC at Messari’s Mainnet conference, which was held last month. 

The information was revealed in the counter-lawsuit filed by Terraform Labs and CEO Do Kwon. 

Terra’s Mirror Protocol 

The subpoena was served in relation to a matter that goes back to May 2021, which was when the SEC’s enforcement division had gotten in touch with Kwon over email. The issue is related to Terra’s Mirror Protocol, a Decentralized Finance (DeFi) platform that allows the trading and minting of synthetic stocks that mirror the price of major US firms. 

The subpoena served to Kwon requests him to provide testimony to US regulators regarding Terra’s Mirror Protocol. 

Do Kwon And Terra’s Pushback 

Do Kwon is contesting the subpoena served against him as a resident of South Korea. While the counter-suit against the SEC is unusual, Stephen Pelly, lawyer at Anderson Kill, explained that preemptive legal action in this particular case made sense, stating that, 

“It’s a reminder to regulators that there are rules of engagement that they need to abide by as well.”

SEC’s Enforcement Action 

The SEC had communicated to Terraform’s lawyers that the US regulator might sue the company, according to the suit, 

“In a conversation on September 15, 2021, the SEC attorneys advised that they believe that some sort of enforcement action was warranted against TFL [Terraform Labs], and any cooperation, and implementation of remedial actions as to the Mirror Protocol, would result in a reduced financial sanction as part of any consent agreement.”

After this communication, the co-founder and CEO of Terraform, Do Kwon, was served with the subpoena. 

Served In Public

The suit also detailed Do Kwon’s serving, stating that the SEC served him the subpoena in public. According to the suit, 

“The subpoenas were served on Mr. Kwon in public: Mr. Kwon was approached by the process server as he exited an escalator at the Mainnet summit while on his way to make a scheduled presentation that was not about the Mirror Protocol.”

The events confirm Indiegogo founder Slavia Rubin’s tweet, in which he claimed to witness the subpoena being served. 

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Publication date: 
10/23/2021 - 14:00

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