US SEC Files Enforcement Action against Mirror Protocol Developer

US SEC Files Enforcement Action against Mirror Protocol Developer

Authorities said in court documents that Kwon failed to comply with the testimonial obligation.

The US Securities and Exchange Commission (SEC) announced on Friday that it filed an action against Mirror Protocol cryptocurrency developer company Terraform Labs PTE, Ltd., and its co-founder and CEO, Do Kwon.

According to the press release, the subpoena enforcement action requested happens in the context of an investigation launched against Terraform Labs and its CEO due to alleged violations of federal securities laws.

In fact, the SEC‘s filing in the US District Court for the Southern District of New York notes that authorities are investigating if they committed such violations by launching Mirror Protocol in 2020. The SEC describes Mirror Protocol as a place where users can create and trade cryptos dubbed as mAssets that ’mirror‘ the price of US securities and obtain Mirror’s governance tokens, known as ‘MIR tokens.’

Failing to Provide Testimonies

“The filing states that, based on its ongoing investigation, the SEC has reason to believe that Terraform Labs and Kwon participated in the creation, promotion, and offer to sell mAssets and MIR tokens to US investors. As stated in the filing, SEC staff served both Terraform Labs and Kwon with investigative subpoenas requiring the production of certain documents and compelling Kwons testimony,” the SEC commented in the announcement.

However, the watchdog pointed out that both Terraform Labs and Kwon have refused to provide any documents or comply with the testimonial obligations, leading the SEC to ask for a subpoena enforcement action. “The SECs application seeks an order from the court directing Terraform Labs and Kwon to show cause why the court should not compel them to produce documents as required by the subpoenas and compel Kwon to appear for testimony. The application further seeks an order from the court, following its ruling on the order to show cause, directing Terraform Labs and Kwon to comply fully with the subpoenas,” the SEC added.