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Do Kwon Lawyer Challenges SEC’s Lawsuit over Stable Currency

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According to reports, the lawyer for Do Kwon, former CEO of Terraform Labs, stated that the SEC\’s lawsuit accusing Do Kwon of securities fraud with Terraform Labs Pte is unfounded,

Do Kwon Lawyer Challenges SECs Lawsuit over Stable Currency

According to reports, the lawyer for Do Kwon, former CEO of Terraform Labs, stated that the SEC’s lawsuit accusing Do Kwon of securities fraud with Terraform Labs Pte is unfounded, partly because the stable currency in question is a currency rather than a security. The lawyer stated in his request to the judge to dismiss the lawsuit that US law prohibits regulatory agencies from using federal securities laws to assert jurisdiction over the digital assets in this case.

Lawyer Do Kwon: The SEC accuses Do Kwon of securities fraud with Terraform Labs without basis

In recent news, former Terraform Labs CEO Do Kwon’s lawyer has challenged the Securities and Exchange Commission’s (SEC) lawsuit accusing Do Kwon of securities fraud with Terraform Labs Pte. The lawyer alleges that the lawsuit is unfounded, partly because the stable currency in question is a currency, not a security. In his request to the judge to dismiss the lawsuit, the lawyer also argued that US law prohibits regulatory agencies from using federal securities laws to assert jurisdiction over digital assets such as the stable currency in question.

Understanding the Terraform Labs Lawsuit

The SEC lawsuit accuses Do Kwon of securities fraud related to the creation and sale of a stable currency linked to a blockchain platform developed by Terraform Labs Pte. Terraform Labs, which is based in Singapore, raised around $32 million from investors worldwide through the sale of this stable currency, which is pegged to the US dollar. In the lawsuit, the SEC alleges that the stable currency should have been registered with the agency as a security and that the company made false and misleading statements that violated US securities laws.
Do Kwon’s lawyer, however, disagrees with this allegation and argues that the stable currency in question should be treated as a currency rather than a security. The lawyer’s counter-argument is based on the fact that the stable currency is indeed used as a substitute for traditional currency, and not a security.

Legal Arguments for and Against the SEC Lawsuit

Do Kwon’s lawyer’s request to dismiss the lawsuit is based on several legal arguments. Firstly, the lawyer argues that US law prohibits the SEC from using federal securities laws to assert jurisdiction over digital assets in this case. Secondly, the lawyer claims that the stable currency in question is a currency rather than a security, and therefore not subject to SEC registration and regulation. The lawyer argues that securities laws do not apply to purely digital assets, and that this is supported by the court’s previous interpretation of the Howey test, which is used to determine whether an asset is a security or not.
The SEC, on the other hand, insists that the stable currency should be treated as a security because it is linked to Terraform Labs’ blockchain platform and was sold to investors with the promise of returns. The SEC also argues that the stable currency is an investment contract that meets all the requirements of the Howey test, as it involves the investment of money in a common enterprise with the expectation of profit.

Implications of the Terraform Labs Lawsuit

The outcome of the Terraform Labs lawsuit could have far-reaching implications for the regulation of digital assets in the US. If the court upholds the view that the stable currency should be treated as a security, it could set a precedent for the SEC to regulate other digital assets, which could impact the development of blockchain technology in the US. On the other hand, if the court agrees with the lawyer’s view that the stable currency is a currency rather than a security, it could pave the way for increased innovation and investment in the blockchain industry.

Conclusion

The Terraform Labs lawsuit highlights the challenges faced by regulators in dealing with digital assets, particularly in the absence of clear regulatory frameworks. The case also raises important questions about the nature of digital assets and how they should be regulated. The outcome of the lawsuit could have significant implications for the US blockchain industry and the wider digital asset market. Nevertheless, it is clear that more clarity is needed from regulators in order to provide a stable foundation for the continued growth and development of this emerging sector.

FAQs

1. What is Terraform Labs?
Terraform Labs is a Singapore-based company that develops blockchain platforms and other digital assets.
2. What is the SEC?
The Securities and Exchange Commission is a US regulatory agency that is responsible for enforcing federal securities laws.
3. What are stable coins?
Stable coins are a type of digital asset that are designed to maintain a stable value relative to a traditional currency, such as the US dollar.

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