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Terra’s Do Kwon Faces Huge Legal Turbulence – US SEC Hot On His Heels As Korean Authorities Turn Up The Heat

Terra’s Do Kwon Faces Huge Legal Turbulence – US SEC Hot On His Heels As Korean Authorities Turn Up The Heat

Terra’s founder has a slew of legal troubles to face after the crash of the network in May. The US SEC won a case against the firm and has reportedly unearthed evidence of money laundering. Experts are predicting an avalanche of class action lawsuits with one already underway in South Korea.

Although Terra has seemingly moved on from the collapse of the first iteration, law enforcement is digging up the rubble to find clues. At the center of the investigation is the project’s founder, Do Kwon as he tries to fight a war on several fronts.

The legal hydra facing Terra’s boss

Do Kwon, Terra’s co-founder faces one of the sternest tests in crypto history as he tries to steer Terra 2.0 to success while juggling multiple lawsuits in different jurisdictions. Recently, Terraform Labs were rattled by a decision of a US Court of Appeal to affirm the decision of a district court that asked the firm to comply with an investigative subpoena issued by the SEC.

The implication of the ruling means that regulators in the US might exercise a wider latitude of jurisdiction over the South Korean company. The court hinged the reason for the judgment on Terra’s “purposeful and extensive” activities in the US.

“I find that there is specific personal jurisdiction with respect to both Kwon and Terraform Labs because they purposefully availed themselves of the privilege of doing business in the United States,” said the judge. “There are employees in the United States, including the general counsel, which I think is telling.”

David Shargel, a partner at Bracewell, told newsmen that the decision was weighty and had the potential to “either encourage a class-action lawsuit in the United States or really throw some water on plaintiff’s lawyers”. Following the decision, it’s safe to assume that Do Kwon is bracing himself for an avalanche of both criminal and civil cases in the US.

The SEC is reportedly investigating Terraform Labs whether or not the firm broke securities laws in marketing TerraUSD (UST). Do Kwon claimed that he had no knowledge of the investigation.

“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.

The Korean drama

As Do Kwon faces the legal obstacle course in the US, he has to grapple with the pressure from South Korea at the same time. A group of disgruntled investors have filed a class-action lawsuit against Kwon and are represented by the Seoul-based LKB & Partners.

The country’s police have also opened an investigation against Kwon and the company bordering on claims of fraud and money laundering. The outcome of the police investigation could tilt the balance for or against the embattled Kwon.

“If the police investigation bears fruit, the civil lawsuits would be able to proceed likely on much better evidentiary footing,” said Daniel Lai, a lawyer with stints at and Uber. “If the investigation does not bear fruit, I’d expect there to be a private and confidential settlement.”

The legal storms are hitting the firm barely a month after the in-house legal team resigned from their roles . The trio of Lawrence Florio, Noah Axler, and Marc Goldich ditched the company in the wake of the network’s algorithmic stablecoin de-pegging from the US dollar. shares this Contents always with License.

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