In a significant legal development, US District Judge Jed Rakoff granted the US Securities and Exchange Commission (SEC) the authority to collaborate with the South Korean government in its probe against Do Kwon’s Terraform Labs co-founder, Daniel Shin, and collect evidence from payments company Chai Corp.

The SEC’s legal challenge against Terraform Labs and its former CEO, Do Kwon, has intensified as it pursues evidence alleging that the duo played pivotal roles in a scheme which reportedly wiped out over $40 billion in cryptocurrency value. According to Bloomberg, Judge Rakoff sanctioned the SEC’s utilization of a process grounded in a “1970 treaty governing requests to gather evidence internationally.”

The legal focus is cast on allegations surrounding the misuse of the blockchain and the TerraKRW stablecoin. The lawsuit alleges that Kwon and this company “faked transactions on their blockchain to seem to be utilizing their technology.”

Court Approves SEC Probe Of Terra Co-Founder In Korea

The SEC’s keen interest lies in garnering testimonies and documents concerning Chai’s payment procedures, its incorporation of the blockchain and stablecoin, communications exchanged between both entities, and what was disclosed to Chai’s investors about their collaborative nature.

Do Kwon, currently incarcerated in Montenegro due to charges related to passport forgery, is confronted with legal action both in the US and South Korea, inclusive of the SEC’s complaint. Significantly, neither Kwon nor his company resisted the SEC’s evidentiary demands. Instead, they have “submitted their requests for evidence to bolster their defense,” suggesting an active engagement in clearing their names.

A notable twist in this intricate tale is the joint origin of Terraform Labs and Chai Corp. Both companies were initiated by Kwon and Shin but underwent a division in 2020, leading to Kwon helming Terraform and Shin overseeing Chai. This interconnected history further complicates the investigation.

Last April, South Korean prosecutors took action against Daniel Shin, albeit his legal counsel staunchly argues his non-involvement in the downfall of Terra.

Previously, at the end of July, a federal judge ruled that Terraform Labs and its founder, Do Kwon, must confront fraud allegations presented by the SEC. The regulatory body accused the Singapore-based Terraform Labs PTE Ltd and Do Kwon of “orchestrating a multi-billion dollar crypto asset securities fraud” linked to LUNA and the UST stablecoin.

Adding to the timeline, the SEC initiated its case against the Singapore-based Terraform Labs PTE Ltd and its founder Do Kwon in February. The regulatory body’s charges are grave, accusing them of “orchestrating a multi-billion dollar crypto asset securities fraud.” Central to this is an algorithmic stablecoin and a suite of other crypto asset securities, whose intricate operations and representations are now under intense scrutiny.

At press time, the LUNC price was at $0.00006342.