Terraform Labs Pte. requested permission from a judge to subpoena information from collapsed crypto empire FTX, saying the data would aid the failed stablecoin issuer in its defense against fraud charges levied by the US Securities and Exchange Commission.
(Bloomberg) — Terraform Labs Pte. requested permission from a judge to subpoena information from collapsed crypto empire FTX, saying the data would aid the failed stablecoin issuer in its defense against fraud charges levied by the US Securities and Exchange Commission.
The SEC sued Terraform Labs and its co-founder and former chief executive officer, Do Kwon, in February, accusing them of illegally offering unregistered securities in a scheme that wiped out at least $40 billion worth of crypto. Terraform’s algorithmic stablecoin TerraUSD and its sister token Luna went to zero in May 2022, with the SEC faulting the way the two coins were designed to rely on each other to maintain value.
Lawyers for Terraform have alleged they cannot be held responsible for the tokens’ failure, blaming instead a coordinated attack by short sellers. Kwon and others have previously alleged that Alameda Research, FTX’s sister trading house, was behind the effort.
Terraform filed a motion on Wednesday in FTX’s bankruptcy case to subpoena non-public information from the company’s international and US exchanges about digital wallets used by short sellers between March and May last year. It also requested information about wallets used by Jump Trading LLC, which it said the SEC had accused of collaborating with Terraform to help prop up TerraUSD and Luna’s prices during the de-peg.
Read more: Mystery of Terra Collapse Deepens With Possible FTX Role Raised
“The attack catalyzed massive asset withdrawals from protocol(s) developed by TFL, and flooded FTX and other markets with sell/offer orders,” Terraform said in its motion. It requested FTX’s records about wallets, trading accounts and assets used to transact on the exchanges and information on sales or offers of large volumes of Terraform’s cryptocurrencies.
It also sought data on other wallets and trading accounts that could have been used by these or other short sellers, their balances and holdings, and the identities of those wallets’ owners or controllers.
The motion included a declaration from Terraform CEO Chris Amani as evidence. He was announced as the post’s new holder earlier this week. Kwon stepped down as CEO in March and was sentenced to four months in a Montenegrin prison after attempting to travel with a forged passport.
The request was made in FTX Trading Ltd., 22-11068, U.S. Bankruptcy Court for the District of Delaware. The original case is Securities and Exchange Commission v Terraform Labs, PTE. LTD and Do Hyeong Kwon, 1:23-cv-01346, US District Court, Southern District of New York (Manhattan).
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