Court Orders Genesis to Produce Documents After Subpoena in Terraform Labs Case

A federal judge in the United States has issued an order compelling Genesis Global entities to produce specific documents in response to a subpoena requested by Terraform Labs.

This marks a crucial turn in the ongoing legal battle surrounding Terraform Labs and its alleged misleading of investors regarding the Terra USD (UST) stablecoin. The order comes as part of the U.S. Securities and Exchange Commission’s (SEC) civil case against Terraform Labs and its CEO, Do Kwon.

The order, issued by Judge Jed Rakoff on October 13 in the U.S. District Court of the Southern District of New York, mandates Genesis to provide the requested documents within five days, potentially until October 18.

The original subpoena was sent by Terraform Labs on September 12, demanding the necessary records by October 9. However, Genesis failed to comply within the stipulated timeframe.

The nature and specifics of the documents under subpoena remain unclear, adding intrigue to the case and raising questions about the exact details Terraform Labs seeks from Genesis.

Terraform Labs vs SEC: A Complex Legal Saga

The SEC initiated legal proceedings against Terraform Labs, the entity behind the ill-fated Terra USD stablecoin, in February 2023. Allegations surfaced that Terraform Labs and its CEO, Do Kwon, had deceived and misled investors regarding the functionality and potential of their algorithmic stablecoin. 

The fallout of the Terra ecosystem was a significant event in the 2022 crypto market crash, which also saw the bankruptcy of major crypto firms like FTX, BlockFi, and Voyager Digital.

Genesis, a prominent player in the crypto space, faced its own set of challenges when it filed for bankruptcy protection in January. At the time, the company estimated its liabilities to be around $1 billion against $10 billion in assets.

Genesis and the cryptocurrency exchange Gemini were targeted in a civil suit filed by the SEC in January, accusing them of offering unregistered securities through Gemini’s Earn program.

The latest court order to produce subpoenaed documents indicates that the legal battle is far from over. It is part of a broader legal landscape where Terraform Labs and Genesis grapple with failures and navigate through complex legal proceedings.