The lawyers representing the United States Securities and Exchange Commission (SEC) have contended that the additional documents submitted by Dentons, the legal counsel for Terraform and Do Kwon, in support of their motion to dismiss the lawsuit, lack adequate support for dismissing the case.
The SEC’s counsel asserts that the Binance.US transcript and internal SEC emails, presented by the defense, hold no relevance to the current case. They argue that the Howey Test clearly defines the parameters of an “investment contract” and contend that UST should be classified as a security.
In a court hearing on June 15, Dentons submitted supplementary documents to bolster their motion to dismiss the lawsuit filed by the U.S. SEC. The focus of the hearing was to determine if the digital assets developed by Terraform Labs should be classified as securities under the criteria of an “investment contract.”
The legal team from Dentons asserts with conviction that the algorithmic stablecoin UST (now USTC) is not classified as a security, emphasizing its practical purpose rather than being an investment contract. In support of their motion to dismiss the lawsuit, they submitted supplementary documents, which encompass the U.S. House Financial Services Committee hearing on digital asset regulation and stablecoin issuance, the SEC’s request for a restraining order against Binance.US, and the Hinman emails from the SEC v. Ripple lawsuit.
The defense lawyers highlighted the existence of a “regulatory gap” regarding the classification of crypto assets as securities, particularly as the U.S. Congress engages in discussions about regulatory frameworks for digital assets and stablecoin issuance. Additionally, they argued that the SEC is exceeding the scope of securities laws and relying on internal emails related to “investment contracts” to determine the security status.
Judge Jed Rakoff who is presiding over the case has announced that a decision on the motion to dismiss the case will be rendered by July 14th.
Dentons represented Do Kwon earlier to challenge the US SEC subpoena in its investigation of Mirror Protocol in 2021 and a class action lawsuit in the Singapore High Court in 2022. The law firm also represents Terra in other lawsuits.
Related: Do Kwon could serve prison in both US and South Korea, prosecutor says
Meanwhile, Montenegro High Court has approved the bail of Do Kwon and former CTO Han Chang-joon. Also, Do Kwon has been taken into extradition custody in Montenegro while the court decides on South Korea’s extradition request for him.
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