Terraform Labs, a Singapore-based crypto firm offering synthetic stocks on its blockchain, disclosed that the US Securities and Exchange Commission had subpoenaed its chief executive officer while he attended a conference in New York. It made the revelation in a lawsuit Terraform itself filed against the SEC in response.
Terraform says in its suit that the SEC’s process server approached Do Kwon, who is a resident of South Korea, in September as he was on his way to give a presentation at the “Mainnet 2021” summit. The subpoenas are among the latest efforts by US authorities to assert their purview over crypto companies even when based abroad as they seek to extend its global reach over the industry. Kwon’s and Terraform’s attorneys argue that the subpoenas were an improper attempt by the SEC to claim jurisdiction.
“It’s a clever effort to try to quash this subpoena, but I’m not aware of a case like this being successful,” said Gary DeWaal, an attorney for law firm Katten who previously was a senior trial attorney at the Commodity Futures Trading Commission, adding that courts are generally sympathetic to SEC subpoenas. DeWaal said that if Terraform’s effort is successful, the SEC can still pursue the information but would have to work with the foreign governments where Kwon and the company are based.