🚀🚀🚀 #SEC Whistleblower Reveals Chai Payments App in Terra Ecosystem Didn’t Use Crypto 🚀🚀🚀
Four cryptocurrency tokens offered by Do Kwon and Terraform Labs, the company he co-founded, have been deemed unregistered securities in a recent summary judgment ruling by Judge Jed Rakoff of the U.S. Court for the Southern District of New York. The tokens in question include #TerraUSD (UST), $LUNA , wLUNA, and Mirror Protocol (MIR). Notably, the ruling dismissed the notion that Terra’s Mirror Protocol “mAssets” constituted security-based swaps.
The judgment highlighted a crucial revelation regarding the Chai payments platform, which Kwon often promoted as a real-world use case of the Terra #blockchain . The SEC presented evidence indicating that the Chai platform did not operate on the Terra blockchain as claimed. Payments were allegedly settled using traditional methods and then mirrored on the Terra blockchain through a server under Kwon’s control, according to an email from a Chai employee in May 2020.
Moreover, a whistleblower, identified as Chai’s Chief Product Officer, disclosed that a former Terraform employee who joined Chai revealed that “there’s no crypto going on within Chai.” The whistleblower claims to have confronted Kwon about Chai’s true nature in September 2021, with Kwon allegedly showing indifference.
Despite compelling evidence, Judge Rakoff acknowledged disputes of material fact, particularly concerning the credibility of whistleblowers. The defense argues that one whistleblower attempted to extort Kwon and Terra co-founder Daniel Shin after being terminated from Chai. Inconsistencies in the whistleblower’s account, including the source of information about Chai’s systems, also contribute to the disputes.
Terraform CTO Chris Amani contradicts claims, stating Chai used the blockchain. The court ruled Kwon and Terraform violated U.S. law for unregistered digital currencies. Summary judgment on SEC fraud claims denied, trial scheduled for January 29, 2024.
Source - Ruholamin Haqshanas @ruholamin-haqshanas
Website - Cryptonews