Major Crypto Project Terraform Labs Sues SEC to Dispute a Subpoena

Terraform Labs and its co-founder Do Kwon filed a lawsuit against the Securities and Exchange Commission (SEC). The lawsuit disputes the subpoena issued to them by the agency during the Messari crypto conference held last month in New York City.

Before SEC issued the subpoenas, the two parties had a dialogue regarding Mirror Protocol, a decentralized finance protocol created on Terra. One can use it to trade “synthetic” assets tracking the real assets’ price movements, such as shares of Netflix and Tesla.

Besides disputing the subpoena, the company also claims that the SEC violated its own rules. According to them, the SEC hired an outside private process service company to deliver the subpoena in a crowded conference to intimidate and embarrass them publicly. The lawsuit also claims that the federal agency violated its own rules of keeping formal orders of investigations confidential.

The filings also include Kwon’s five-hour Webex call on July 8, in which he answered the SEC’s questions on how the Mirror Protocol works. According to Terra Labs, the agency’s subsequent request for documents the company said were either “too broad” or non-existent proved the SEC’s misunderstanding of the project itself.

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