The legal representatives of Terra’s Do Kwon have asked the court to dismiss the SEC’s charges against Terraform Labs and its founders.

The motion states that the collapsed Terra UST stablecoin and Luna tokens are not securities, and as such the agency lacks jurisdiction over the matter. Terra co-founder Daniel Shin and nine others have been indicted by Korean authorities.

Terra UST and Luna, not securities 

As Do Kwon, the creator of the collapsed TerraUSD (UST) algorithmic stablecoin project awaits extradition to the United States or South Korea following his arrest last month in Montenegro, his legal representatives in the U.S. have filed a motion in the Southern District Court of New York to dismiss an SEC’s charges against him.

It will be recalled that the SEC filed charges against Do Kwon and Terraform Labs last Febuary., for defrauding investors of billions of dollars through their now-defunct algorithmic stablecoin and other crypto assets. 

According to the 47-page filing, the defendant argued that the Terra stablecoin, Luna, and other digital assets created by Terraform Labs are not securities. It added that since Congress is yet to grant the SEC the authority to regulate digital assets, the agency lacks jurisdiction on the matter.

Terra co-founder Daniel Shin indicted 

Per a Bloomberg report, Daniel Shin, the co-founder of Terraform Labs, and eight other individuals have been indicted by South Korean authorities on several charges, including violating the country’s capital markets law, illegal trading, and breach of trust.

The prosecutors have reportedly seized around $184.7 million (246.8 billion won) from the individuals. The authorities stated that the Terra project was built on a shaky foundation right from the onset, as the algorithm behind the Terra stablecoin was always destined to fail.

Though authorities have made it clear that Shin and others involved in the project caused irreparable damage to investors globally, his lawyer has argued that Shin has no hand in the collapse of the stablecoin and Luna, as he quit the company two years before the incident.