Terraform Labs, the company behind the Terra blockchain, and its‘s well-documented tussle with the Securities and Exchange Commission (SEC) does not seem to be coming to an end anytime soon. The United States District Court in New York has ordered Terraform Labs and its CEO Do Kwon, to comply with subpoenas issued by the financial regulator.
The subpoenas – which requires named parties to appear or produce documents in court – were issued in connection with the ongoing SEC investigation of a decentralized finance project built on Terra called Mirror Protocol.
Last September, the SEC served a subpoena to Kwon at the Messari Mainnet crypto conference in New York. The SEC acted after learning about Mirror Protocol, a project launched by Terraform Labs last year that allows users to buy and sell synthetic versions of U.S. stocks and other assets. In short, it takes assets you can buy on the stock market and lets you buy them on the blockchain. However, it is not without its risks – and it is highly unregulated.
Located in South Korea, Terraform Labs is known for its stablecoin-focused blockchain, the algorithmic stablecoin $UST, and the chain’s native $LUNA.X token. As of this writing, $LUNA.X is the 10th largest cryptocurrency by market capitalization; $UST was among the top-five issued stablecoins. The SEC’s action baffled Kwon, who filed a lawsuit against the regulator claiming that the move violated the agency’s rules and was intended to intimidate or stir up media interest in its crackdown on cryptocurrency.
After filing the lawsuit, he said at Yahoo Finance’s All Markets Summit, “Regardless of what regulators think of the issue, there’s no change I can make to the Mirror Protocol. So when we say that Mirror is decentralized, it is fully decentralized. There is nothing that the creator can do to sort of cap the growth of the protocol.”
Now that the U.S. has intervened and ordered the crypto firm and its CEO to comply with subpoenas, they cannot simply walk away. The CEO was philosophical in his latest tweet, saying that life’s lessons can all be solved if one is courageous.