- A crypto developer is suing the SEC over two subpoenas he was handed as he walked inside a New York hotel, The Wall Street Journal reported.
- The crypto developer is from South Korea and had voluntarily spoken to the SEC before the subpoenas were issued.
- The developer and his company want the SEC to pay for attorneys’ fees and quash the subpoenas.
A cryptocurrency developer and his company are suing the Securities and Exchange Commission, asking a judge to quash two subpoenas he was handed in public by the agency just before he was due to speak at a conference, according to a Wall Street Journal report.
Do Kwon, who is a citizen of and lives in South Korea, says the SEC’s move violated its own rules and was designed either to embarrass him or to drum up media interest in its cryptocurrency-market crackdown, the report said.
Kwon’s lawsuit doesn’t explain the theory of the SEC’s investigation or what laws his company, Terraform Labs, may have violated. The lawsuit seeks to have the SEC pay Terraform’s attorney fees associated and to shut down the subpoenas.
He was given the subpoenas last month as he walked off an escalator in a New York hotel where he was scheduled to speak at a crypto conference. The complaint says the SEC’s lawyers first emailed Kwon about their investigation in May, seeking his voluntary cooperation, according to the complaint. Regulators interviewed him over video twice and told his lawyers that they believed an enforcement action was warranted.
Terraform Labs, based in Singapore, builds software programs designed to facilitate the use and creation of cryptocurrencies and other digital assets. Kwon’s complaint says the SEC has been investigating a particular application that Terraform developed, the Journal’s report said. Its Mirror protocol allows traders to create new digital assets that track the prices of stocks and exchange-traded funds.
Regulators have warned that such assets look like derivatives, which in the US typically must be traded on regulated markets overseen by agencies such as the SEC. Platforms that sell crypto derivatives usually try to follow US law by prohibiting American traders from accessing their programs, the report said.
The Journal said an SEC spokeswoman declined to comment and an attorney for Kwon didn’t immediately respond to messages seeking comment.