Key Takeaways
- A US Federal Judge has given Genesis Global a five-day deadline to produce documents for a Terraform Labs subpoena.
- The subpoena is part of an ongoing SEC lawsuit against Terraform Labs and its CEO, Do Kwon.
- Genesis Global had filed for bankruptcy protection in January 2023.
US Federal Judge Jed Rakoff has put a clock on Genesis Global, giving the company only five days to provide certain records in response to a subpoena from Terraform Labs.
Judge Rakoff has specified a likely deadline of October 18th for Genesis to meet the terms of the subpoena. Interestingly, Genesis had previously missed an October 9th deadline to provide these documents, originally demanded by a subpoena dated September 12th.
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While it remains unclear which specific documents Terraform Labs has requested, the judge's order brings the issue into sharp focus.
The current legal action against Terraform Labs started with an SEC lawsuit filed earlier this year. The SEC's accusations against Terraform Labs revolve around misleading statements about its stablecoin, Terra USD (UST). Notably, the downfall of Terra's ecosystem is considered a significant factor in the 2022 cryptocurrency market crash, followed by the bankruptcy of various major players like FTX, BlockFi, and Celsius Network.
Do Kwon, the CEO of Terraform Labs, is currently serving a four-month prison sentence in Montenegro for unrelated charges concerning falsified travel documents.
Genesis itself is no stranger to regulatory scrutiny. The firm sought bankruptcy protection at the beginning of this year, citing liabilities of about $1 billion and assets worth $10 billion.
Additionally, both Genesis and the cryptocurrency exchange Gemini faced a separate civil suit from the SEC earlier this year, accusing them of offering unregistered securities.
The judge's order for a rapid document handover pushes further the ongoing case between the SEC, Terraform Labs, and Genesis Global. With Terraform Labs already under a cloud of legal complications, the short timeline could be a pivotal moment in the unfolding saga of these cryptocurrency firms.
