Terraform Labs Seeks Information From FTX To Defend Against Fraud Charges: Report
- Terraform Labs is in a legal battle with the SEC over allegations of offering unregistered securities that caused $40 billion+ in crypto losses.
- The firm has requested non-public information from FTX to aid its defense against the charges.
According to Bloomberg, Terraform Labs seeks information from FTX to defend against SEC accusations. The case involves allegations of illegal activity and unregistered securities causing crypto losses of $40B+.
Terraform Labs has recently found itself in a legal battle with the US Securities and Exchange Commission (SEC) over accusations of offering unregistered securities in a scheme that resulted in losing at least $40 billion worth of cryptocurrency. The SEC has accused Terraform Labs and its co-founder, Do Kwon, of illegal activity. As a result, the firm has been seeking ways to defend itself against these allegations.
In a recent development, Terraform Labs has requested permission from a judge to subpoena information from FTX, a collapsed crypto empire, to aid its defense against the charges. Specifically, the firm requested non-public information from FTX’s international and US exchanges about digital wallets used by short sellers between March and May last year. It has also asked for information on wallets used by Jump Trading LLC, which Terraform Labs alleges collaborated with the company to help prop up TerraUSD and Luna’s prices during the de-peg.
Terraform Labs has alleged that it cannot be held responsible for the failure of its algorithmic stablecoins, TerraUSD and Luna, blaming instead a coordinated attack by short sellers. Terraform’s stablecoins went to zero in May 2022, with the SEC faulting the way the two coins were designed to rely on each other to maintain value. The motion filed by Terraform Labs also seeks data on other wallets and trading accounts that could have been used by short sellers, their balances and holdings, and the identities of those wallets’ owners or controllers.
The request for information was made in FTX Trading Ltd., 22-11068, U.S. Bankruptcy Court for the District of Delaware, and the original case is Securities and Exchange Commission v Terraform Labs, PTE. LTD and Do Hyeong Kwon, 1:23-cv-01346, US District Court, Southern District of New York (Manhattan).
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.