The judge in FTX’s bankruptcy proceedings allows Terraform Labs to subpoena relevant information from the exchange in its pending case against the U.S. Securities and Exchange Commission (SEC).
According to Judge John Dorsey submit on July 31, Terraform Labs may issue subpoenas to FTX Trading and FTX.US to collect evidence for their defense against SEC’s fraud allegations.
Says the court filing,
“The debtors [FTX] may designate any production in response to the subpoenas in accordance with the terms of the protection order entered in the SEC action or a confidentiality agreement entered into between the debtors and [Terraform Labs].”
Last month, Terraform Labs claimed that their algorithmic stablecoin and governance token was experiencing problems due to a possible attack by short sellers. It is speculated that Alameda Research may have been involved in the attack.
The court documents show that attorneys for the FTX debtors had “no formal objection” to the court order.
Terraform Labs fell apart in mid-2022 when the stablecoin project UST essentially collapsed to zero. FTX went bankrupt in November of the same year.
The Swiss authorities reported this in June froze $26 million in assets from Terraform Labs and its founder, former crypto billionaire Do Kwon.
The frozen assets reportedly belonged to Kwon, his associate Hang Chang-joon and former head of research at Terraform Labs Nicholas Platias.
South Korean prosecutors also alleged in June that Kwon took $29 million worth of crypto assets from Terraform Labs’ holdings following his arrest in Montenegro.
Kwon has already served more than three months of a four-month prison sentence in Montenegro for using a forged Costa Rican passport, though the relatively short sentence is unlikely to be the end of the Terra founder’s troubles.
Dan Sunghan, the director of the Financial Crimes Investigation Bureau at Seoul’s Southern District Prosecutor’s Office, recently told Bloomberg that Kwon could face more than four decades behind bars after being responsible for what is believed to be the largest financial fraud case in South Korea. history.
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