Terraform Labs and co-founder Do Kwon are asking the court in the Southern District of New York to throw out portions of the U.S. Securities and Exchange Commission’s (SEC) complaint.
The SEC is accusing the bankrupt stablecoin issuer and its disgraced former CEO of offering and selling crypto assets that qualify as securities.
The regulator also alleges that the defendants secretly transferred millions to Swiss bank accounts as the Terra stablecoin and its associated crypto asset Luna plummeted.
In a new motion filed on October 27, Terraform and Kwon deny the allegations and argue that the complaint regarding the Swiss accounts should be withdrawn for lack of factual basis.
“The SEC launched this very public action – which, unusually, included a comment from its chairman in the press release that the SEC later removed from its website – with little to no investigation into many of the claims it made, and with little knowledge about the question of whether some of the facts it asserts are true, and the factual knowledge that some are false.
Citing serious flaws in the case, the defendants are seeking summary judgment in an effort to obtain a favorable ruling without the need for a trial. In cases where summary judgment is granted, the opposing party may lose due to lack of evidence.
“With the conclusion of the facts and expert discovery, the flaws in the SEC’s case have become even worse, as it is now clear that no admissible evidence exists to support many of the SEC’s allegations and that the SEC knew some of its allegations were true. was false when she filed the amended complaint.
It is not surprising that, given these serious deficiencies, the SEC is seeking to rely on proposed experts to clarify the numerous factual and evidentiary gaps in its case.”
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