The legal team of Terraform Labs and its founder, Do Kwon, has drawn attention to a potential sanction threat against the SEC by a Utah federal judge.

This development surfaced in the Southern District of New York Court, presided over by Judge Jed S. Rakoff. The case has been under intense scrutiny, primarily centered on allegations against Terraform Labs regarding its blockchain and cryptocurrency operations.

The recent twist, however, shifts some focus onto the SEC. Terraform Labs’ counsel informed Judge Rakoff of a separate case in Utah, in which Judge Robert J. Shelby hinted at sanctioning the SEC for misleading conduct in its case against Digital Licensing Inc.

The information was raised amidst preparations for a potential January 2024 trial or a summary judgment decision for the Terraform Labs case. The move by Terraform Labs’ counsel is an effort to question the SEC’s conduct in similar regulatory cases.

Last month, Do Kwon was extradited from Montenegro after serving a sentence for document forgery. As the case continues, Judge Rakoff also took measures to protect whistleblowers’ identities, indicating the sensitivity and complexity of the trial.