Judge Allows Terraform Labs To Subpoena FTX Entities in Regards to Failure of UST

The judge in the FTX bankruptcy proceedings is permitting Terraform Labs to subpoena relevant information from the exchange in its ongoing case against the U.S. Securities and Exchange Commission (SEC).

According to Judge John Dorsey’s filing on July 31st, Terraform Labs can issue subpoenas to FTX Trading and FTX.US to gather evidence for their defense against SEC’s fraud allegations.

Says the court filing,

“The Debtors [FTX] may designate any production in response to the Subpoenas in accordance with the terms of the Protective Order entered in the SEC Action or any confidentiality agreement entered into between the Debtors and [Terraform Labs].”

Last month, Terraform Labs claimed that their algorithmic stablecoin and governance token encountered issues as a result of a potential attack by short-sellers. It is speculated that Alameda Research may have been involved in the attack.

The court filings show that lawyers for the FTX debtors had “no formal objection” to the court order.

Terraform Labs fell apart in mid-2022 when when its stablecoin project UST collapsed essentially to zero. FTX declared bankruptcy in November of the same year.

In June, Swiss authorities reportedly froze $26 million worth of assets from Terraform Labs and its founder, former crypto billionaire Do Kwon.

The frozen assets reportedly belonged to Kwon, his associate Hang Chang-joon and former head of research at Terraform Labs Nicholas Platias.

South Korean prosecutors also alleged in June that Kwon had moved $29 million worth of crypto assets out of Terraform Labs’ possession after his arrest in Montenegro.

Kwon has already spent more than three months of a four-month prison sentence in Montenegro for using a forged Costa Rican passport, though the relatively short sentence likely won’t be the end of the Terra founder’s problems.

Dan Sunghan, the director of the financial crime investigation bureau at the Seoul Southern District Prosecution Service, recently told Bloomberg that Kwon could serve more than four decades behind bars, after being responsible for what is believed to be the largest financial fraud case in South Korean history.

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Check Price Action

Follow us on Twitter, Facebook and Telegram

Surf The Daily Hodl Mix

Featured Image: Shutterstock/Catalyst Labs