A judge granted Jump Crypto's motion to confidentially file certain materials during the discovery phase in the U.S. Securities and Exchange Commission's lawsuit against Terraform Labs and its founder Do Kwon.
Federal Judge Jed Rakoff filed the motion Tuesday in New York. If the court later decides that a document needs to be made public, the ruling can be overturned, Rakoff noted in his opinion.
Jump Crypto has been accused of manipulating the price of the TerraUSD stablecoin and in turn making a profit of $1.28 billion.
Terra, according to the SEC, lent โan American trading companyโ 30 million Terra (MOON) tokens in November 2019 and an additional 65 million LUNA in September 2020. The trading company in question is Jump Crypto, according to a report by The Block.
Read more: Where things stand: The SEC vs Do Kwon and Terraform Labs
The โloansโ were to improve liquidity, Terra said, but the trading company was โcontinuously selling LUNA into the market,โ Terra said. SECOND alleged.
When TerraUSD lost its peg to the US dollar in May 2021Jump Crypto entered into an agreement to purchase a large sum of the stablecoin in an effort to stabilize its value, according to securities regulators.
โDefendants falsely and misleadingly represented to the public that UST's algorithm had successfully re-linked UST to the dollar, giving the investing public the false and misleading impression that the re-linking had occurred without human intervention and deceptively omitting the true reason for re-linking. -peg: intervention by [Jump Crypto]โ, reads the complaint from February 2023.
He The SEC filed its complaint against Terra and Kwon in February this year, about nine months after the collapse of the Terra ecosystem. The securities regulator alleges that Kwon "orchestrated a multimillion-dollar cryptoasset securities fraud" between April 2018 and May 2022.
In its complaint, the SEC alleges that Kwon and his company misled investors. They reportedly made false claims that Korean mobile payment processor Chai used the Terraform blockchain for transactions and settlements. According to regulators, these claims were not true.
Read more: Jump Crypto President Pleads Fifth When Asked About Do Kwon's Alleged Bribery
Jury selection is scheduled to begin Jan. 29, 2024, in midtown Manhattan, should the case go to trial. Currently, both the SEC and Terra have requested summary judgment which, if granted, could result in the matter being resolved outside of trial.
In July, Rakoff denied Kwon and Terra's motion to dismiss the case, ruling that the government had presented sufficient arguments against the company and its founder to proceed.
โ[B]Because, according to the complaint's well-argued allegations, the defendants used false and materially misleading statements to entice U.S. investors to purchase and hold the defendants' products, and because those products were unregistered investment contract securities that allowed investors make profits. of the alleged investment activities of defendants and others, the motion to dismiss must be denied,โ Rakoff wrote in his July 2023 opinion.
In addition to the SEC's civil suit against him, Kwon faces criminal charges in the US. in relation to the collapse of the Terraform ecosystem. Kwon is currently serving a four-month prison sentence in Montenegro for alleged document falsification. The country approved his extradition earlier this month. Once his sentence is served, authorities will decide whether to extradite the founder to the United States or South Korea.
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