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Terraform Labs co-founder and CEO Do Kwon has suffered a legal blow as a U.S. judge has denied his request to prevent the U.S. Securities and Exchange Commission (SEC) from obtaining certain documents related to the firm’s operations.
The documents in question are being sought from the Monetary Authority of Singapore (MAS), per a Bloomberg report.
According to court records, the U.S. District Court for the Southern District Judge Jed Rakoff last Friday rejected the request made by Do Kwon and Terraform to compel the Securities and Exchange Commission (SEC) to withdraw its demand for documents held by the Singaporean regulator and the defendants.
Luna Foundation Guard, a fund established to maintain the value of the company’s algorithmic stablecoin Terra USD at $1, is also involved in the case.
The collapse of the Terra ecosystem last May was among the key factors that contributed to the crypto industry’s slide into its crypto winter, with prices of Bitcoin and other major altcoins plunging and several established players, including the crypto hedge fund Three Arrows Capital (3AC), going bankrupt.
The SEC sued Singapore-based Terraform Labs and CEO Do Kwon in February this year, accusing them of securities fraud related to the company’s algorithmic stablecoin Terra USD and its sister token LUNA.
The agency claims Terraform Labs and Do Kwon marketed “crypto asset securities” to investors seeking to profit from investing in Terra UST and related Terra products claiming that the tokens would increase in value.
The move followed the opening of an investigation into the collapse of Terra and whether its stablecoin violated federal securities regulations in June 2022.
After months on the run, Do Kwon was arrested last month in Montenegro, with the Balkan nation’s police later confirming that both the U.S. and South Korea have requested the extradition of Terra co-founder.