Terraform Labs has achieved a significant victory against the Securities and Exchange Commission (SEC) in their ongoing legal dispute. Attorneys representing the crypto firm have raised concerns about the Commission’s behavior and have utilized a recent case to support their argument for a favorable judgment.
Terraform Labs Refers to Precedent in Support of Motion
In a court filing dated December 4, the defendants referenced the SEC’s case against Digital Licensing as additional support for their motion for summary judgment. They highlighted Chief Judge Robert Shelby’s decision and order to show cause against the Commission in that case.
The court in the Digital Licensing case found that the SEC had made serious misrepresentations and ordered the Commission to justify its actions. The legal team for Terraform Labs emphasized the relevance of this case to their arguments regarding the “SEC’s general use of excerpts of evidence” and specific allegations.
The defendants are anticipating that the ruling in the referenced case will influence Judge Rakoff, who presides over their case, to rule in their favor. They specifically mentioned their motion for summary judgment filed on October 27, asserting that they believe the SEC lacks a legal basis for their case.
Previously, the SEC had achieved a significant victory in this case when Judge Rakoff examined whether the Terra tokens were securities and determined that the SEC had adequately demonstrated that the UST and LUNA coins could be classified as securities. Therefore, it remains to be seen if Judge Rakoff will be inclined to rule in favor of Terraform Labs this time.
Total market cap rises above $1.5 trillion | Source: Crypto Total Market Cap on Tradingview.com
The SEC’s Missteps Under Legal Scrutiny
The SEC’s enforcement actions in the crypto space have been subject to criticism. Notably, its case against Ripple has been a significant setback for the Commission. After insisting for years that XRP was a security, Judge Analisa Torres provided clarity by ruling that XRP was not inherently a security.
A pattern seems to be emerging, suggesting that the Commission may prioritize its beliefs over legal principles. Ripple’s Chief Legal Officer, Stuart Alderoty, recently discussed this “disturbing pattern,” highlighting how the court found the Commission to be “hypocritical” in the Ripple case.
Similarly, the court also concluded that the SEC had acted “arbitrarily and capriciously” in handling Grayscale’s application. The most recent case, the Digital Licensing case, revealed the SEC’s use of misrepresentations to achieve its goals.
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