Former head of law enforcement at the SEC: The United States has jurisdiction over the Do Kwon case

According to reports, Lisa Braganca, a former head of law enforcement at the US Securities and Exchange Commission, said that the US law enforcement authorities have jurisdiction over Terraform Labs based in Singapore and its founder, Do Kwon, because they knowingly promote their LUNA and terraUSD (USD) tokens to US investors.

Interpretation of this information:

The US Securities and Exchange Commission (SEC) continues to assert its authority over entities based outside the United States if they have a significant presence and engage in activities with US investors. A recent report indicates that Lisa Braganca, a former head of law enforcement at the SEC, has stated that Terraform Labs, a Singapore-based firm, and its founder, Do Kwon, are within the jurisdiction of US law enforcement authorities.

Braganca’s statement follows SEC Chairman Gary Gensler’s call for more investor protection measures in the cryptocurrency sector. He clarified that the Howey test, which defines whether a token is a security, applies to cryptocurrency. Therefore, issuers must register with the SEC and disclose relevant information about their offerings.

Terraform Labs is responsible for developing the Terra blockchain, which features LUNA, a native token, and terraUSD, a stablecoin. According to Braganca, the company has purposely marketed LUNA and terraUSD to US investors. Terraform Labs’ website features a “Get Terra” button that directs visitors to a list of exchanges that trade LUNA and terraUSD.

Terraform Labs’ previous activities may make it easier for US authorities to prove the company’s knowledge of promoting its tokens to US investors. The SEC may have a strong case against Terraform Labs for disregarding regulations, such as requiring SEC registration for its token offerings.

Overall, Braganca’s statement reaffirms the SEC’s commitment to enforce regulations on cryptocurrency and blockchain firms, regardless of their geographic locations. The jurisdictional claim will likely set a precedent for other companies operating in the cryptocurrency sector, warning them that they cannot avoid regulatory compliance by merely relocating their headquarters or operations to another country.