by Matthew Russell Lee, Patreon Substack
SDNY COURTHOUSE, April 19 – 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 25, thread:
...Witness is on stand, bought $188,000 of UST on Gemini in Feb-March 2022
Terraform lawyer's Q: You thought there was no risk? Witness: Terraform Labs said that, relatively
Q: Which is riskier, UST or IBM stock? Witness: Clearly, UST. [Light laughter in the courtroom]
Terra's lawyer: Did you understand TerraUST could fall into a death spiral? Witness: Only if their representations were not true.
Terra's lawyer: Nothing further.
Judge Rakoff: Re-direct. SEC's lawyer: Why are you here? Witness: If people do wrong they should be punished. Do Kwon said it was a stable coin.
Jury leaves.
Judge Rakoff: I would never have adjourned the trial until now if I hadn't thought Mr. Kwon was doing everything to be extradited here.
More on Substack here
Ten days later on April 5, Judge Rakoff gave legal instructions to the jury for deliberation, including that "I instruct you as a matter of law that the tokens known as UST, LUNA, and wLUNA are securities." Full 24 page legal instructions to jury on Patreon here.
And then the verdict: Liable, liable, liable - and reckless, not intentional.
On April 19 the SEC filed a motion for injunction against violations, and $4 billion disgorgement, to fine Terraform Labs $420 million and Do Kwon $100 million. Motion on Patreon here.
The case is Securities and Exchange Commission v. Terraform Labs Pte Ltd. et al., 23-cv-1346 (Rakoff)
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