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A legal battle between the Securities and Exchange Commission of the United States and a blockchain business is heating up, with the former receiving court orders to seek an investigative subpoena. Terraform Labs is being accused of breaking securities rules and failing to comply with a previously issued demand by the regulator.

The Securities and Exchange Commission (SEC) of the United States initiated an investigation against Terraform two months ago. The regulator pursued the company because it allegedly allowed its users to trade securities without obtaining licenses.

Terraform is the company behind LUNA, a digital currency with a market worth of $19.5 billion and a price of $45 per unit. Users can create and exchange digital assets (mAssets) that track the price of real-world assets like equities using its Mirror Protocol.

SEC officials issued Terraform Labs’ CEO, Do Kwon, a subpoena during the Messari Mainnet conference in New York in September.

Shortly after, Kwon, a South Korean resident, filed a complaint against the SEC, accusing it of unlawfully serving the subpoena and violating his right to due process. He further argued that the SEC had broken its standards by delivering the subpoena to him by a private process server. The agency allegedly chose to deliver the subpoena at a public gathering, according to Kwon, in order to frighten and disgrace him.

The Securities and Exchange Commission (SEC) is retaliating with its legal action. According to the regulator’s news statement, the Southern District of New York issued an order compelling Terraform Labs to comply with subpoenas for records and testimony.

Despite several attempts to bargain with counsel, the SEC claims that Terraform Labs and Kwon have refused to deliver any records and that Kwon has failed to meet his testimony responsibilities.

While the SEC continues to pursue Terraform, it has stated that this is merely a fact-finding investigation and that it has not yet decided that the firm or its founder has broken any federal securities laws.

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