(Reuters) – A federal judge on Thursday ruled in favor of the U.S. Securities and Exchange Commission on claims that Terraform Labs and its founder Do Kwon offered and sold unregistered securities.
U.S. District Judge Jed Rakoff in Manhattan also ruled in favor of the defendants on SEC claims related to security-based swaps.
He denied both sides’ motions for summary judgment on the SEC’s fraud claims, which will proceed toward a trial scheduled for Jan. 29, 2024.
Lawyers for Terraform and Kwon did not immediately respond to requests for comment. The SEC did not immediately respond to a similar request.
Kwon is the entrepreneur behind two cryptocurrencies, TerraUSD and its paired token Luna, which lost an estimated $40 billion or more in 2022 when TerraUSD was unable to maintain its 1:1 peg to the U.S. dollar.
The SEC accused Terraform and Kwon of misleading investors about the stability of TerraUSD, and claiming that its crypto tokens would increase in value.
Kwon has also been charged with fraud by U.S. prosecutors in Manhattan. He has been fighting extradition to the United States.
(Reporting by Jonathan Stempel in New York and Tom Hals in Wilmington, Delaware; Editing by Diane Craft and Matthew Lewis)
