Terraform Labs and SEC Reach Accord on Confidential Filings Prior to Civil Trial

A recent Cointelegraph report states that a protective order has been endorsed by a federal judge presiding over the civil dispute involving the United States SEC and Terraform Labs, maintaining the confidentiality of materials leading up to the trial. Judge Jed Rakoff, in a filing on December 20th in the U.S. District Court for the Southern District of New York, stated that the SEC and Terraform Labs had mutually agreed to court-approved terms, mandating the parties to refrain from disclosing materials marked as confidential. The court will seal all discovery filings labeled as confidential before the trial, with the judge expressing skepticism about approving future requests for sealing at this stage.

The order did not specify the rationale behind the confidential filings, citing only Judge Rakoff's determination of "good cause." On December 18th, lawyers representing the SEC, Terraform Labs, and its co-founder Do Kwon, who is currently held in custody in Montenegro awaiting extradition to the U.S. or South Korea, consented to the order.

The downfall of Terraform Labs following the depegging of its stablecoin TerraUSD (UST) from the U.S. dollar had a notable impact and might have contributed to the crypto market downturn in 2022. In February, the SEC accused Terraform Labs and Kwon of orchestrating a multi-billion dollar crypto asset securities fraud, alleging the unlawful sale of unregistered securities.

The outcomes of filings in the SEC v. Terraform civil case may have far-reaching implications for legal matters affecting numerous companies in the crypto space. In August, a judge authorized a subpoena allowing Terra to request information from FTX entities as part of the defunct crypto exchange's bankruptcy case. Additionally, Judge Rakoff accepted confidentially filed materials from Jump Crypto Holdings during the SEC civil case discovery in November.

Resources:

Cointelegraph