The United States Securities and Exchange Commission (SEC) has marked some progress in its action against Terraform Labs PTE, Ltd., and its co-founder and CEO, Do Kwon.

On February 17, 2022, Judge J. Paul Oetken of the New York Southern District Court issued an order directing the defendants to comply with investigative subpoenas for documents and testimony served on the defendants by the SEC in September 2021.

The subpoenas concern the SEC’s investigation into the Mirror Protocol. The SEC is investigating whether Terraform Labs, Kwon or others violated the federal securities laws by, among other things, not registering the offer or sale of securities, selling security-based- swaps outside of a national security exchange, acting as an unregistered broker or dealer, or engaging in securities transactions by an unregistered investment company.

Based on its ongoing investigation, the SEC has reason to believe that Terraform Labs and Kwon participated in the creation, promotion, and offer to sell mAssets and MIR tokens to U.S. investors. SEC staff served both Terraform Labs and Kwon with investigative subpoenas requiring the production of certain documents and compelling Kwon’s testimony.

Despite numerous attempts to negotiate with counsel, Terraform Labs and Kwon have refused to produce any documents and Kwon has failed to comply with the testimonial obligations.

In issuing the order on February 17, 2022, the Judge also stayed it for 14 days to permit further briefing regarding a potential stay pending any appeal of the order.