Terraform Labs Granted Subpoena Power by Judge in Ongoing FTX Bankruptcy Case Against SEC
In a significant development in the FTX bankruptcy proceedings, Terraform Labs has been granted the authority to issue subpoenas to FTX Trading and FTX.US for crucial information pertaining to their defense against the U.S. Securities and Exchange Commission’s (SEC) fraud allegations. The ruling was handed down by Judge John Dorsey and is outlined in a court filing on July 31st.
According to the court filing, Terraform Labs can now utilize these subpoenas to gather evidence in their ongoing legal battle with the SEC, aiming to address the accusations of fraud surrounding their algorithmic stablecoin and governance token. This comes after Terraform Labs alleged that their stablecoin project UST faced challenges due to a potential attack by short-sellers, with speculation pointing towards possible involvement by Alameda Research.
The court filings reveal that lawyers representing the FTX debtors did not formally object to the court order, thereby allowing the subpoena process to proceed unhindered.
The collapse of Terraform Labs in mid-2022 resulted in their stablecoin project UST losing almost all of its value, leading to FTX declaring bankruptcy later that same year. The aftermath of the collapse has been riddled with legal complications and financial investigations.
In June, Swiss authorities froze assets worth $26 million linked to Terraform Labs and its founder, former crypto billionaire Do Kwon. The frozen assets belonged to Kwon, his associate Hang Chang-joon, and the former head of research at Terraform Labs, Nicholas Platias.
South Korean prosecutors also accused Kwon of moving $29 million worth of crypto assets out of Terraform Labs’ possession following his arrest in Montenegro. Kwon’s legal troubles began with a prison sentence for using a forged Costa Rican passport, but the severity of his alleged financial fraud could result in a much more substantial sentence.
Dan Sunghan, the director of the financial crime investigation bureau at the Seoul Southern District Prosecution Service, recently stated that Kwon might face a sentence of more than four decades behind bars. This case is being considered the largest financial fraud case in South Korean history.
As Terraform Labs gains subpoena power to further defend themselves in the ongoing case against the SEC, the situation remains complex and is being closely monitored by both legal experts and the crypto community at large.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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