Day 1 Is Off To A Hot Start

The much-anticipated civil trial between Terraform Labs, its embattled founder Do Kwon, and the US Securities and Exchange Commission (SEC) began on Monday in Manhattan, marking a pivotal moment in the ongoing scrutiny of the crypto space and regulatory oversight.

Do Kwon / Terra Trial: Day 1

Zack Guzmán, the award-winning Web3 host and founder of Coinage Media, was live on site and provided a summary from the courthouse via X, noting a stark contrast in attendance compared to the Sam Bankman-Fried (SBF) trial. Despite the lesser crowd, the significance of the trial was palpable, with both parties presenting their opening arguments before a carefully selected jury of nine – a process that included its share of courtroom levity, particularly from US District Judge Jed Rakoff.

Guzmán remarked, “Eventually landed on a jury of just 3 men and 6 women – mostly minorities. Of the three men, one is divorced, […] The divorcee is rocking a New York Giants jacket. Judge Rakoff jokes that he is also a Giants fan… “That’s why I’m wearing black, because I am in mourning.”

Related Reading: Terraform Labs In The Hot Seat: Trial Begins As Do Kwon’s Final Extradition Decision Looms

Besides that, Judge Rakoff and the opening statements set the tone for what promises to be an intense legal confrontation. Rakoff laid out ground rules from the jump: “Trial expected to take 2 weeks. Only 4-word objections allowed. The only way you can get me mad is a speedy objection. You say 3 words: ‘Objection, lack of foundation’.”

The SEC’s opening salvo framed the case as a clear instance of fraud, drawing parallels to arguments used in the recent trial against Sam Bankman-Fried and FTX. Central to the SEC’s accusations are claims that Terraform Labs misrepresented the use of its blockchain in the Chai mobile payment app and misled investors about the stability of its TerraUSD stablecoin, which was designed to maintain a peg to the dollar.

Attorney Devon Staren presented a concise yet potent argument: “Terra was a fraud, a house of cards, and when it collapsed, investors lost nearly everything.” On the other side, Terraform’s defense, articulated by David Patton, pivoted on a critical distinction between failure and fraudulent intent.

Patton’s assertion, “Failure doesn’t equal fraud,” seeks to challenge the SEC’s narrative by suggesting that the collapse of TerraUSD was a consequence of market volatility rather than deceptive practices by Terraform Labs and Do Kwon.

The SEC’s case hinges on two main allegations: that Terraform Labs and Do Kwon misrepresented the stability and functionality of TerraUSD and that it falsely claimed its blockchain was utilized in the Chai payment app. These claims are not just about investor losses but also about trust in the blockchain ecosystem and the integrity of its architects.

Terraform’s defense strategy involves not only refuting these allegations but also highlighting the innovative nature of their work in the cryptocurrency space. The defense hints at forthcoming evidence that will demonstrate the actual usage of Terra’s blockchain technology in the Chai app, countering the SEC’s claims of misinformation.

As the trial against Do Kwon progresses, both parties are expected to present detailed evidence and expert testimonies to support their arguments. The SEC will likely delve deeper into the technical and financial mechanisms that led to TerraUSD’s instability, while Terraform’s defense will aim to contextualize the challenges and uncertainties inherent in pioneering new financial technologies.

At press time, Terra Luna Classic (LUNC) traded at $0.000169259.

Terra Luna Classic price
LUNC price holds above the 20- and 50-week EMAs, 1-week chart | Source: LUNCUSD on

Featured image from Reddit, chart from

Source link

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top