US Judge Approves Protective Order in SEC vs Terraform Labs Lawsuit, Protects Confidential Material
Summary:
A U.S federal judge has approved a protective order maintaining the confidentiality of particular materials in the lawsuit between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs. The order limits the disclosure of confidential documents ahead of trial. It was agreed upon by lawyers representing the SEC, Terraform Labs, and co-founder Do Kwon, who is awaiting potential extradition from Montenegro. The downfall of Terraform Labs and the decoupling of its stablecoin TerraUSD from the U.S. dollar was noted as a major factor in the 2022 crypto market downturn. The ruling could impact ongoing cases and the SEC's approach towards crypto firms.
A U.S federal judge dealing with the lawsuit between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs, has approved a protective command that secures the confidentiality of specific materials ahead of the court proceedings. On December 20, while filing at the U.S. District Court for the Southern District of New York, Judge Jed Rakoff communicated that the SEC and Terraform Labs have accepted conditions endorsed by the court. This will essentially restrict most parties from divulging contents that are classified as confidential. Every finding marked confidential will further be kept private by the court prior to the trial. The Judge indicated that he would likely dismiss any future pleadings for concealment.
The order didn't directly mention the motive for the confidential filings, other than Judge Rakoff determining there was a "good cause." On December 18, attorneys representing the SEC, Terraform Labs, and its co-founder, Do Kwon, agreed to the order. Currently, Kwon is under arrest in Montenegro, awaiting potential extradition to either the U.S. or South Korea.
The downfall of Terraform labs, alongside its stablecoin TerraUSD (UST) decoupling from the U.S. dollar was a momentous occasion that might have added to the cryptocurrency market's downturn in 2022. The SEC accused Terraform Labs and Kwon in February of allegedly "masterminding a multi-billion dollar crypto asset securities fraud," insisting the involved parties dealt in and sold unregistered securities.
The documents related to the SEC's lawsuit against Terraform could impact legal concerns regarding many firms within this sector. During August, a judge approved an order enabling Terra to subpoena FTX entities as part of the insolvent crypto exchange's bankruptcy dealings. Judge Rakoff also accepted confidentially filed materials from Jump Crypto Holdings concerning the SEC's lawsuit in November.
The SEC has faced criticism for its "regulation by enforcement" approach towards cryptocurrency companies within the United States. The authority has ongoing cases against Binance, Kraken, Ripple, Coinbase, and more.
Published At
12/21/2023 7:21:37 PM
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