APPEALS COURT RULES DO KWON, TERRAFORM LABS MUST HEED SEC SUBPOENA SERVED IN SEPTEMBER

The saga surrounding Do Kwon and Terraform Labs takes another dramatic turn as the United States Court of Appeals for the Second Circuit has ruled against their challenge to a Securities and Exchange Commission (SEC) subpoena.This ruling, delivered on Thursday, compels Kwon and Terraform Labs to comply with the SEC's demands for documents and testimony related to an investigation that began back in September. Exchange Commission v. Terraform Labs Pte, Ltd, Do Kwon, No. (2nd Cir. J) (App.). The judgment of the United States Court of Appeals for the Second Circuit upheld the SEC s service of process on Mr. Kwon personally, which was not in compliance with the SEC s service rules because Mr. Kwon wasThis isn’t just another legal skirmish; it's a significant development with potentially far-reaching implications for the future of cryptocurrency regulation and the accountability of those operating within the digital asset space.The SEC's investigation centers around whether Terraform Labs used its Mirror Protocol to sell unregistered securities, a critical point of contention that could reshape how digital assets are classified and regulated. Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in September J 0:03This case has been closely watched by legal experts, crypto enthusiasts, and investors alike, all eager to understand the boundaries of regulatory oversight in the burgeoning world of decentralized finance (DeFi). The appeals court ruled that the subpoena was properly served and that the SEC could serve Terraform as a corporate entity through Kwon. Furthermore, the appeals court found that the district court did have jurisdiction over Terraform Labs and Kwon. The SEC began its interaction with Terraform and Kwon in this case in May 2025, according to theWill this ruling set a precedent?How will it impact investor confidence?And what does it mean for the future of innovation in the crypto industry? The United States Court of Appeals for the Second Circuit on Thursday rejected Terraform Labs CEO Do Kwon s dispute of a subpoena by the Securities and Exchange Commission (SEC).Let's dive into the details of this landmark decision and explore its potential ramifications.

The Background: SEC's Investigation into Terraform Labs

The SEC's scrutiny of Terraform Labs stems from concerns that the company, led by Do Kwon, may have violated U.S. securities laws through the operation of its Mirror Protocol.Mirror Protocol allows users to create and trade synthetic assets, which are digital tokens that mimic the price of real-world assets, such as stocks. The U.S. Court of Appeals for the Second Circuit on Thursday rejected Terraform Labs CEO Do Kwon's defense of a Securities and Exchange Commission (SEC) subpoena. The FBI is seeking documents and testimony related to an investigation into whether Terra Corporation used the Mirror agreement to sell unregistered securities.The SEC alleges that Terraform Labs may have offered and sold these synthetic assets, specifically through the Mirror Protocol, without properly registering them as securities. On J, the United States Court of Appeals for the Second Circuit affirmed a district court order requiring compliance with investigative subpoenas served by the Securities and Exchange Commission on Terraform Labs Pte Ltd and Do Kwon.This failure to register, according to the SEC, puts investors at risk and deprives them of the disclosures and protections afforded by securities laws.

The initial interaction between the SEC, Terraform Labs, and Do Kwon in this matter dates back to May 2025. See full list on crypto.newsThe SEC issued a subpoena seeking documents and testimony from Kwon, believing that Terraform Labs' activities with Mirror Protocol potentially constituted the sale of unregistered securities.Kwon and Terraform Labs contested the subpoena, arguing that the SEC lacked jurisdiction and that the service of the subpoena was improper.This resistance ultimately led to the recent ruling by the U.S.Court of Appeals for the Second Circuit.

The Appeals Court Decision: Upholding the SEC Subpoena

The appeals court definitively rejected Do Kwon and Terraform Labs' arguments, affirming the district court's order requiring compliance with the SEC subpoena. BTCUSD Bitcoin Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in SeptemberThe court found that the subpoena was properly served, and that the SEC was within its rights to serve Terraform Labs as a corporate entity through Kwon, its CEO.Furthermore, the court determined that the district court *did* have jurisdiction over Terraform Labs and Kwon, despite their arguments to the contrary.

Key points from the ruling include:

• The SEC's service of the subpoena on Kwon in New York was deemed proper, even though he and Terraform argued that it violated the SEC's Rules of Practice.
• The court found that Terraform Labs and Kwon had sufficient contacts with the United States to establish personal jurisdiction.
• The court rejected the argument that the SEC's investigation was outside the scope of its authority.

This decision is a significant victory for the SEC, strengthening its ability to investigate and enforce securities laws in the digital asset space.It sends a clear message that cryptocurrency companies operating in or targeting the U.S. market will be held accountable to the same regulatory standards as traditional financial institutions.

Implications for Terraform Labs and Do Kwon

With the appeals court ruling against them, Do Kwon and Terraform Labs are now compelled to comply with the SEC subpoena. The Final Judgment requires Kwon to transfer at least $204,320,196 to the Terraform bankruptcy estate for distribution to harmed investors, including $7 million in cash, all crypto assets of the Luna Foundation Guard, and Kwon s PYTH crypto asset tokens.This means they must provide the requested documents and Kwon must provide testimony under oath. Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in September On Thursday, the United States Court of Appeals (second circuit) rejected Do Kwon s dispute of a. Orbit Chain Offers Multi-Million Dollar Bounty to the Public After Suffering $81,000,000 Hack Last.Failure to comply could result in further legal action, including potential fines and other penalties.

Beyond the immediate legal consequences, this ruling also has significant reputational implications for Terraform Labs and Do Kwon.The ongoing legal battle and the SEC's investigation have already damaged the company's image and eroded investor trust.This latest setback is likely to exacerbate these issues, potentially making it more difficult for Terraform Labs to attract investment and rebuild its reputation in the long term.

The SEC's Broader Regulatory Strategy in the Crypto Space

The SEC's pursuit of Terraform Labs is just one example of its broader effort to regulate the cryptocurrency industry.The agency has consistently asserted that many digital assets are securities and, therefore, subject to U.S. securities laws.This position has been met with resistance from some corners of the crypto community, who argue that the SEC is overstepping its authority and stifling innovation.

Key areas of SEC focus in crypto regulation:

• Defining what constitutes a security in the crypto space. This is a crucial issue that will determine which digital assets are subject to SEC oversight.
• Enforcing registration requirements for crypto exchanges and platforms. The SEC requires exchanges and platforms that facilitate the trading of securities to register with the agency.
• Investigating and prosecuting fraud and other misconduct in the crypto industry. The SEC has brought numerous enforcement actions against individuals and companies involved in fraudulent schemes, insider trading, and other illegal activities.

The SEC's approach to crypto regulation has been controversial, but the agency argues that it is necessary to protect investors and maintain the integrity of the financial markets. The United States Court of Appeals for the Second Circuit on Thursday rejected Terraform Labs CEO Do Kwon s dispute of a subpoena by the Securities and Exchange Commission (SEC). The federal agency was seeking documents and testimony in connection with its investigation of whether Terra used the Mirror Protocol to sell unregistered securities. Kwon wasThe agency contends that many crypto projects operate without adequate disclosures or regulatory oversight, leaving investors vulnerable to fraud and manipulation.

The Mirror Protocol and Unregistered Securities Allegations

At the heart of the SEC's investigation is the allegation that Terraform Labs used its Mirror Protocol to sell unregistered securities. Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in SeptemberMirror Protocol allows users to create ""mirrored assets"" (mAssets) that track the price of real-world securities, such as stocks.These mAssets can then be traded on decentralized exchanges.

The SEC argues that these mAssets are securities because they represent an investment in a common enterprise, with the expectation of profit derived from the efforts of others (in this case, Terraform Labs). Uh oh, looks like the head of Terraform Labs is about to get into some hot water. that the subpoena was properly served and that the SEC could serve Terraform as a corporate entity through Kwon. Furthermore, the appeals court found that the district court did have jurisdiction over Terraform Labs and Kwon.Because Terraform Labs did not register these mAssets as securities, the SEC alleges that the company violated U.S. securities laws.

This argument raises complex legal questions about the classification of digital assets and the application of securities laws to decentralized finance (DeFi) platforms. According to the appellate court's summary order, Terraform and Kwon argued on appeal that the SEC violated its Rules of Practice when it served the subpoenas by handing copies to Kwon, Terraform's chief executive officer, while he was present in New York, and that the district court lacked personal jurisdiction because Kwon and Terraform hadIf the SEC is successful in its argument that mAssets are securities, it could have a chilling effect on the DeFi industry, potentially leading to increased regulation and decreased innovation.

Potential Consequences of mAssets Being Classified as Securities:

• Increased regulatory scrutiny of DeFi platforms. DeFi platforms that offer or facilitate the trading of mAssets could be subject to SEC oversight and required to register with the agency.
• Compliance costs for DeFi projects. DeFi projects would need to invest in compliance infrastructure and legal expertise to ensure that they are complying with securities laws.
• Reduced innovation in the DeFi space. The increased regulatory burden could discourage entrepreneurs from developing new DeFi products and services.

Do Kwon's Legal Battles and Terraform Labs' Troubles

This latest ruling is just one chapter in a long and complicated legal saga involving Do Kwon and Terraform Labs.The company's collapse in 2022, which wiped out billions of dollars in investor wealth, triggered a wave of lawsuits and investigations.Kwon himself has faced criminal charges in both South Korea and the United States.

In addition to the SEC investigation, Terraform Labs is also facing a class-action lawsuit filed by investors who lost money in the company's collapse.The lawsuit alleges that Kwon and Terraform Labs misled investors about the stability and sustainability of their algorithmic stablecoin, TerraUSD (UST), which played a central role in the company's downfall.On top of that, he was also found liable for fraud by a jury.

Ongoing Legal Challenges Facing Do Kwon and Terraform Labs:

1. SEC investigation into Mirror Protocol. This is the subject of the recent appeals court ruling.
2. Criminal charges in South Korea. Kwon faces charges related to fraud and violations of capital markets laws.
3. Criminal charges in the United States. Kwon faces charges related to fraud in connection to the collapse of the TerraUSD and LUNA tokens.
4. Class-action lawsuit filed by investors. This lawsuit seeks damages for investors who lost money in the Terra/LUNA collapse.

The Final Judgment and Asset Transfer Requirements

As part of a settlement related to the collapse of TerraUSD (UST) and Luna, a final judgment requires Kwon to transfer a significant portion of his assets to the Terraform bankruptcy estate.This transfer is intended to compensate harmed investors.

Specific assets that Kwon is required to transfer include:

• At least $204,320,196 in value
• $7 million in cash
• All crypto assets held by the Luna Foundation Guard
• Kwon's PYTH crypto asset tokens

This asset transfer aims to provide some measure of recovery for investors who suffered substantial losses as a result of the Terra/Luna collapse. The U.S. regulator is investigating whether Terraform used its Mirror Protocol to sell unregistered securities in a case unrelated to the Terra Advertisement CoinsIt also demonstrates the potential financial consequences for individuals and companies found liable for fraud and misconduct in the cryptocurrency industry.

Jurisdiction Disputes: Where Can the SEC Act?

A key point of contention in the legal battle between the SEC and Terraform Labs has been the issue of jurisdiction. Do Kwon and Terraform Labs to Comply With the SEC Investigation After Losing Appeal Case ب.ظ ایران اخبار اخبارTerraform Labs and Do Kwon have argued that the SEC lacks jurisdiction over their activities because they are based in South Korea and have limited connections to the United States.The appeals court, however, rejected this argument, finding that Terraform Labs and Kwon had sufficient contacts with the U.S. to establish jurisdiction.

This finding is significant because it clarifies the SEC's authority to regulate cryptocurrency companies that operate globally.The court's decision suggests that the SEC can assert jurisdiction over companies that target U.S. investors or conduct business in the United States, even if they are based outside of the country.

The issue of jurisdiction is likely to remain a central point of contention in cryptocurrency regulation going forward. Appeals court rules Do Kwon, Terraform Labs must heed SEC Coin SurgesAs the industry becomes increasingly global, regulators around the world will need to coordinate their efforts to ensure that companies are held accountable for their actions, regardless of where they are based.

Factors that can establish U.S. jurisdiction over foreign crypto companies:

• Targeting U.S. investors. If a company actively solicits U.S. investors, it is more likely to be subject to U.S. jurisdiction.
• Conducting business in the U.S. If a company has a physical presence in the U.S. or conducts a significant portion of its business in the U.S., it is more likely to be subject to U.S. jurisdiction.
• Using U.S. infrastructure. If a company relies on U.S. infrastructure, such as U.S.-based servers or payment processors, it is more likely to be subject to U.S. jurisdiction.

Looking Ahead: The Future of Crypto Regulation and Enforcement

The appeals court ruling in the Terraform Labs case underscores the growing importance of regulatory compliance in the cryptocurrency industry. A federal judge ruled on Thursday that cryptocurrency entrepreneur Do Kwon and his company Terraform Labs violated U.S. law by failing to register two digital currencies that collapsed inAs regulators around the world ramp up their enforcement efforts, companies operating in the space will need to prioritize compliance with securities laws and other regulations.

Failure to comply with regulations can have serious consequences, including fines, penalties, and even criminal charges.It is therefore essential for cryptocurrency companies to seek legal advice and develop robust compliance programs to ensure that they are operating within the bounds of the law. CWJCompanies should also proactively engage with regulators to understand their expectations and address any concerns.

Key steps for crypto companies to ensure regulatory compliance:

• Seek legal advice. Consult with experienced attorneys who specialize in cryptocurrency regulation.
• Develop a compliance program. Implement policies and procedures to ensure compliance with securities laws and other regulations.
• Conduct regular audits. Conduct regular audits to assess the effectiveness of your compliance program.
• Stay informed about regulatory developments. Monitor regulatory developments and update your compliance program accordingly.
• Engage with regulators. Proactively engage with regulators to understand their expectations and address any concerns.

Conclusion: Key Takeaways and Future Implications

The Appeals Court ruling ordering Do Kwon and Terraform Labs to comply with the SEC subpoena marks a pivotal moment in the ongoing debate over cryptocurrency regulation.The court's decision reinforces the SEC's authority to investigate and enforce securities laws in the digital asset space, even when companies operate globally. The United States Court of Appeals for the Second Circuit on Thursday rejected Terraform Labs CEO Do Kwon s dispute of a subpoena by the Securities and Exchange Commission (SEC). The federal agency was seeking documents and testimony in connection with its investigation of whether Terra used the Mirror Protocol toThis case serves as a stark reminder that cryptocurrency companies cannot operate with impunity and must adhere to the same regulatory standards as traditional financial institutions. On June 8, a US court dismissed an appeal filed on behalf of Terraform Labs CEO Do Kwon, stating that he and his company are required to comply with Securities and Exchange Commission (SEC) investigations into Mirror Protocol, a platform company based in South Korea.The implications of this ruling are far-reaching, potentially impacting the future of DeFi, the classification of digital assets, and the overall regulatory landscape of the crypto industry.

Key takeaways from this case include:

• The SEC has broad authority to regulate cryptocurrency companies that operate in or target the U.S. market.
• Digital assets, such as mAssets, may be classified as securities, subjecting them to SEC oversight.
• Cryptocurrency companies must prioritize regulatory compliance and seek legal advice to ensure they are operating within the bounds of the law.
• Do Kwon and Terraform Labs must now comply with the SEC subpoena and face potential legal and reputational consequences.

As the cryptocurrency industry continues to evolve, regulatory scrutiny is likely to intensify.Companies that prioritize compliance and transparency will be best positioned to navigate the changing landscape and build long-term success.For investors, this ruling is a reminder of the inherent risks in the cryptocurrency market and the importance of conducting thorough due diligence before investing in any digital asset. Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in September PANews ｜ 8:43 The U.S. regulator is investigating whether Terraform used its Mirror Protocol to sell unregistered securities in a case unrelated to the Terra collapse.Ultimately, the ongoing legal battles and regulatory developments will shape the future of the crypto industry and determine its place in the global financial system. The United States Court of Appeals for the Second Circuit on Thursday rejected Terraform Labs CEO Do Kwon s dispute of a subpoena by the Securities and Exchange Commission (SEC). The federal agency was seeking documents and testimony in connection with its investigation of whether Terra used the Mirror Protocol to sell unregistered securities.What next steps will Do Kwon and Terraform Labs take? Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in September. PANews., .Only time will tell.