Terraform Labs is facing a number of legal battles, the latest of which comes following the TerraUSD depegging last month.
The US Securities and Exchange Commission (SEC) served the founder and CEO of Terraform Labs, Do Kwon, with a subpoena while he was at a New York conference last year.
While Do Kwon initially denied being sued, he later made the decision to sue the SEC for breaking its own rules when serving him and the court lacked jurisdiction, specifically for “two improperly issued subpoenas” and “failure to keep confidential an investigation into the Mirror Protocol”.
A US federal judge has now ruled that the subpoena was in fact legitimate, and Do Kwon and Terraform Labs must cooperate with the commission’s investigation.
The SEC initially investigated Do Kwon and Terraform Labs over the Mirror Protocol, a Terraform Labs project, handing him a subpoena during the Mainnet Conference in September 2021.
The ruling on Wednesday by the court of appeals means that D Kwon and Terraform Labs must comply with the commission’s investigation, with the summary order noting:
“The 9 subpoenas were served as part of an SEC investigation into whether Appellants violated federal 10 securities laws in their participation in the creation, promotion, and offer to sell various digital 11 assets related to the “Mirror Protocol,” a blockchain technology.”
Despite fielding several legal battles Do Kwon remains in Singapore, where many believe he may face prison time following the depegging of TerraUSD (UST) last month.
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