• Judge John Dorsey has allowed Terraform Labs to issue subpoenas to FTX Trading and FTX.US for evidence in the SEC fraud case against them.
• Terraform Labs claim that their algorithmic stablecoin project, UST, collapsed due to a potential attack by short-sellers.
• Swiss authorities have frozen $26 million in assets from both Terraform Labs and its founder Do Kwon while South Korean prosecutors allege that Kwon may face up to four decades in prison for his role in what is believed to be the largest financial fraud case in South Korean history.
Judge Allows Terraform Labs To Subpoena FTX Entities
The judge presiding over the FTX bankruptcy proceedings has granted Terraform Labs permission to subpoena relevant information from the exchange in its ongoing case against the U.S. Securities and Exchange Commission (SEC). According to Judge John Dorsey’s filing on July 31st, FTX Trading and FTX.US must provide any production documents required by the subpoenas under either a confidentiality agreement with Terraform or via protective order established by the SEC Action.
Terraform Alleges Attack By Short-Sellers
Last month, Terraform Labs claimed that their algorithmic stablecoin and governance token encountered issues as a result of a potential attack by short-sellers. It is speculated that Alameda Research may have been involved in the attack. The court filings show that lawyers for the FTX debtors had “no formal objection” to the court order.
Terraform Collapses And Founder Arrested
Terraform Labs fell apart in mid-2022 when when its stablecoin project UST collapsed essentially to zero. Soon after, FTX declared bankruptcy in November of 2022 and founder Do Kwon was arrested later that year for using a forged Costa Rican passport, resulting in him spending more than three months of a four-month prison sentence in Montenegro already.
Assets Frozen From Both Terraform And Founder
In June of 2023 Swiss authorities reportedly froze $26 million worth of assets from both Terraform Labs and its founder Do Kwon along with his associate Hang Chang-joon and former head of research at Terraform Labs Nicholas Platias . South Korean prosecutors also alleged during this time that Kwon had moved $29 million worth of crypto assets out of Terrafrom Lab’s possession after his arrest was made public knowledge earlier this year..