Terraform Labs and its co-founder Do Kwon are asking the Southern District of New York court to strike out parts of the complaint filed by the U.S. Securities and Exchange Commission (SEC).
The SEC accuses the collapsed stablecoin issuer and its disgraced former CEO of offering and selling crypto assets that qualify as securities.
The regulator also claims that the defendants secretly moved millions into Swiss bank accounts as the Terra stablecoin and its associated crypto asset Luna tumbled.
In a new motion filed on October 27th, Terraform and Kwon deny the allegations and argue that the complaint related to the Swiss accounts needs to be taken out for lack of factual basis.
“The SEC launched this very public action—which, unusually, included a comment by its Chairman in the press release that the SEC later erased from its website—with little to no investigation into many of the claims it made, scant knowledge of whether or not some facts it asserts are true, and actual knowledge that some are false.”
Citing severe deficiencies in the case, the defendants seek a summary judgment in a bid to get a favorable ruling without the need to go to trial. In cases when summary judgment is granted, the opposing party may lose due to lack of evidence.
“Indeed, with the close of fact and expert discovery, the deficiencies in the SEC’s case have gotten worse, as it is now apparent that admissible evidence does not exist to support many of the SEC’s claims and that the SEC knew some of its allegations were false when it filed the Amended Complaint.
Not surprisingly, given these severe deficiencies, the SEC tries to rely on proposed experts to paper over the myriad factual and evidentiary gaps in its case.”
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