SEC Subpoenaed Terra Founder Do Kwon at Mainnet 2021

Court filings show that the US SEC served Do Kwon, founder of Terraform Labs, during a September conference in New York City.


key takeaways

  • Southern District of New York court filings indicate that Kwon is suing the SEC for two improper filings and a breach of confidentiality in its investigation of Terra’s Mirror Protocol
  • Terraform Labs is headquartered in Singapore

Court filings from the Southern District of New York show that the US Securities and Exchange Commission (SEC) served Terra founder Do Kwon during the Mainnet Conference in September in New York City.

In response, Kwon is suing the SEC for “two improperly issued subpoenas” and “failure to keep confidential an investigation into the Mirror Protocol,” according to filings issued Friday.

The Mirror Protocol

The Mirror Protocol is a decentralized finance (DeFi) protocol powered by smart contracts that creates synthetic assets on the Terra blockchain. These synthetic assets mirror real-world assets and include mTSLA, mGOOGL (from Alphabet Inc.), mNFLX, and Apple, Microsoft, and Alibaba.

Called mAssets, synthetic stocks give Terra token-holders exposure to real-world price action without having to own or transact in fiat currencies.

Tokenized stocks are traded on digital asset exchanges, including FTX. They have caught the attention of regulators around the world. 

Regulatory environment 

Speculation that the person served at the conference was a foreign national, given that it is easiest to serve individuals on US soil, swirled in the weeks following the event. The SEC did not confirm or deny the fact that a subpoena was served when Blockworks filed a Freedom of Information Act request in late September. 

When serving foreign nationals, government officials more commonly opt to go through attorneys, but this is not always the case. Serving a subpoena directly, especially in a public place surrounded by members of an industry that the SEC is knowingly going after, may have been a way to set an example, Daniel Payne, fintech and blockchain attorney at Murphy and McGonigle said in September. 

The filing comes amid a series of regulatory actions against the cryptocurrency community in recent weeks.

The New York Attorney General announced earlier this month that it would be requiring two companies to halt operations within the state. The released letters sent to the companies, Nexo and Celcius, cite concerns with traded securities and request more information about practices. 

The US Department of Justice announced the creation of the National Cryptocurrency Enforcement Team to take over investigations and prosecutions of criminal activities associated with digital assets earlier this month. 

The SEC has not publicly responded to the lawsuit or provided any information into an investigation against Do Kwon.


    Upcoming Events

    Salt Lake City, UT

    WED - FRI, OCTOBER 9 - 11, 2024

    Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

    recent research

    ao cover.jpg


    Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.


    The “fastest-growing ETF in history” has seen net inflows on every trading day since its Jan. 11 launch


    Relm and Chainproof will provide insurance quotes to distributed validators


    DLC.Link uses a Taproot-based Bitcoin multisig to let institutions mint dlcBTC, starting on Arbitrum


    Pre-seed Bitcoin startup deals rose 360% in 2023, a TVP report shows


    Circle’s new smart contract to allow holders of BlackRock USD Institutional Digital Liquidity Fund to redeem shares for its stablecoin


    Uniswap says it was not surprised to receive a Wells notice given the SEC’s “abusive” use of power as of late