A United States judge has ruled that the Securities and Exchange Commission (SEC) can seek assistance from the South Korean government in interviewing Daniel Shin, co-founder of Terraform Labs, along with Do Kwon.
US District Judge Jed Rakoff ruled on Thursday that the SEC is permitted to utilize a procedure outlined in a 1970 treaty that regulates international evidence-gathering requests. Despite denying any misconduct, Kwon did not contest SEC’s request.
As part of the motion granted by Judge Rakoff, the SEC also intends to obtain evidence from Chai Corp., the Seoul-based payments company founded by Kwon.
The move is part of the SEC’s strategy to validate the accusations made in the lawsuit against Terraform and its former CEO.
The lawsuit, filed in February by the SEC, accuses TFL and Kwon of orchestrating a multi-billion dollar crypto asset securities fraud involving the now-defunct algorithmic stablecoin TerraUSD and other alleged crypto securities.
The relationship between Chai and Terra has been a bone of contention. Several reports have hinted that Kwon may have overstated the extent and duration of the relationship between Terra and the e-commerce system.
The SEC made a startling allegation that Chai Payments did not use the Terraform blockchain to process and settle payments as per the partnership deal of 2019.
“Rather, Defendants deceptively replicated Chai payments onto the Terraform blockchain, in order to make it appear that they were occurring on the Terraform blockchain, when, in fact, Chai payments were made through traditional means.”
In addition to the SEC lawsuit, Kwon is facing criminal charges in the US as well as in South Korea.
The disgraced exec had previously stated that the charges leveled against him by the prosecutors of his home country are “politically motivated.”
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