by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, March 29 – The SEC's trial against Terraform Labs began on March 25. Inner City Press was there, thread. On November 17, 2023 US District Court for the Southern District of New York Judge Jed S. Rakoff held a hearing on potential trial experts. Inner City Press live tweeted that too, thread.
From March 27, Day 3, thread
From March 29, Day 5, thread
Jury entering! Judge Rakoff: Juror 8 is really well dressed today [some laughter in the courtroom] Proceed. [Deposition of Paul Kim is being read / acted for the jury]
Witness who left Jump Crypto Terraform's lawyer: Do you have any personal information about the deals between Terra & Jump Crypto? Witness: Only about UST adoption. Terra's lawyer: You talked about trading during the depeg - but you were not a trader? W: I was not
h Terra's lawyer: You don't know what the book stacker is, right? Witness: I recognize the name. It's a trading system. Layering the book on the exchange, that's where the name comes from. Terra's lawyer: You never reviewed trades? W: I saw the notifications
Witness: The traders were in the Slack, I saw the notifications there. Terra's lawyer: You understand that prior to the restoration of the peg, Jump was market-making for UST, right? Witness: That's my understanding. Judge Rakoff: How much more to you have?
Do Kwon's lawyer: We have about two questions. Judge Rakoff: Alright. Terra's lawyer: Chris Drew was on the team? Witness: I don't recognize that name.
Terra's lawyer: Have you told Mr. Han about your whistleblower report? SEC: Objection! Judge: SustainedTerra's lawyer: Was any of the trading that you reported in your report done by Mr. Han? SEC: Objection. No foundation. Judge Rakoff: Sustained.
Terra's lawyer: Did Mr. Han find out about your whistleblower report?
Witness: Yes when your lawfirm published my name
Witness: While I was still at Jump we were receiving the one million Luna a month. Terra's lawyer: You don't know if that had been paid even before May 2021? SEC: Objection! Judge: Rakoff.
Terra's lawyer: You don't have any notes, do you? Witness: If I took notes I would have emailed them to myself, so they'd be on a Jump server somewhere. Terra's lawyer: Is the reason that Jump did not invest in Monad that Jump was no longer a VC? Witness: No.
Lawyer for Do Kwon: You said you didn't report your concerns about the depeg because of pushback? Witness: Yes. Lawyer for Do Kwon: Any other examples? Witness: Yes. Project Nebula. Lawyer for Do Kwon: But that wasn't about the depeg? Witness: No. No further Qs
[After a sidebar, Judge Rakoff returns and calls a break]
Back in SEC v. Terraform Labs trial - SEC is putting on an expert in "digital forensics", won't even get to cross examination today - but there *may* be another less scripted witness
Expert: The LP server just sent to the Chai wallets, then back to the LP wallets. Judge Rakoff: Ladies and gentlemen, we'll break with this witness here because we have another witness in from California who can only be here today, should only taken half an hour.Witness is a pharmacist from California. Witness: I learned of Do Kwon, I looked for a stable coin and came to UST.
SEC lawyer: How did you learn of UST? Witness: Articles online, YouTube videos. SEC lawyer: What did you hear? Witness: It was pegged to the dollar
Witness: It promised 20% annual return. I took out a $400,000 loan, bought UST and put it in the Anchor protocol. I looked at my investment every day. SEC lawyer: What happened next? Witness: May 9, I started getting notification that there was a de-peg.
Witness: Do Kwon tweeted, Steady, lads and that he was working to restore the peg. SEC lawyer: What is this? Witness: That's the tweet. SEC lawyer: How much of your $400,000 do you have left? Witness: Only $28,000
Cross examination: Defense: You sued OK Coin, right? SEC: Objection! Judge: Overruled Witness: Yes. Defense: And you said they misled you about UST? Witness: Yes
Judge Rakoff: I see Juror 5 looking at her watch (laughter) You may go for the weekend.
More on Substack here
The case is Securities and Exchange Commission v. Terraform Labs Pte Ltd. et al., 23-cv-1346 (Rakoff)
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