- This comes after Kwon’s legal team submitted a similar letter a few days ago.
- Kwon is still in Montenegro, where he was arrested for using counterfeit passports.
The SEC’s brief restates the agency’s contention that Kwon and Terraform offered securities, stating that there is no question that buyers invested their money, either in traditional currency or crypto assets.
The petition claims that the Howey test is met when investors put their money into a joint business with the intention of profiting primarily from the efforts of the promoters. An investment contract’s eligibility as a security under the United States federal law is determined by its performance under the Howey test.
Similar Approach by Kwon
The SEC filing reaffirms its earlier findings that Terraform and Kwon participated in fraudulent activities and made false representations by excluding material information and falsely attributing the stabilization of UST’s price to their algorithm when, in fact, they had secretly arranged for external intervention. In May of last year, Terra crashed, wiping out billions of dollars in investor capital.
This comes after Kwon’s legal team submitted a similar letter a few days ago, arguing that the SEC has failed to show that Kwon was peddling securities and urging the court to rule in their favor. Kwon is still in Montenegro, where he was arrested for using counterfeit passports at the airport and sentenced to time served.
Sam Bankman-Fried, founder of the defunct cryptocurrency exchange FTX, was deemed guilty on all seven charges. The judgements were announced on November 2, 2023, after a month-long trial.
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