Amid the Terraform Labs crisis and the Mirror Protocol judicial investigation, the American regulator decided to study the history of the LUNA emission in more detail.
The US Securities and Exchange Commission (SEC) has officially requested information from Terraform Labs.
The legal controversy between the Terra ecosystem and the SEC began in September 2021, when Terraform Labs CEO Do Kwon was served with a subpoena at the Messari Mainnet conference. The commission invited the head of Terraform Labs to discuss the activities of the platform based on Terra – DeFi Mirror Protocol. The protocol allowed synthetic tokens to be issued and traded based on shares of popular companies such as Tesla, Microsoft, and Airbnb.
Do Kwon initially denied receiving a subpoena, but later sued the SEC himself, alleging that the subpoenas were “improperly executed and served.” In February, a New York court ordered Terraform Labs and its CEO to comply with a subpoena and appear to testify before the SEC.
Kwon then filed an appeal, which was dismissed by a US court on June 8, stating that he and his company are not required to comply with the SEC’s requirements to investigate the operation of the Mirror protocol. Kwon argued that Terraform Labs did not have a sufficient presence in US markets, and that the subpoena should have been delivered to Terraform Labs’ legal counsel, not to him personally.
Upholding the February ruling, a United States Court of Appeals acquitted the SEC’s actions, citing Terraform Labs’ numerous marketing and promotions to US consumers, the maintenance of US employees, contracts with US firms, and Mirror Protocol-related business travel to the country.
As part of the ruling, Terraform Labs and Kwon are required to submit all documents related to the DeFi protocol and testify to the SEC. But earlier there was no mention of documents related to LUNA.
