Business News Report
January 16, 2024

SEC Delays Trial for Terraform Labs’ Do Kwon to Allow Finalization of Extradition Process

SEC Delays Trial for Terraform Labs' Do Kwon to Allow Finalization of Extradition Process

United States Securities and Exchange Commission (SEC) agreed to postpone a civil trial against Terraform Labs and its co-founder Do Kwon, who is accused of orchestrating a $40 billion cryptocurrency fraud. The decision aims at facilitating Do Kwon’s extradition from Montenegro, allowing his participation in the trial.

In a filing submitted on Monday to the federal court in Manhattan, the SEC argued that a “modest” postponement of the trial scheduled for January 29 was warranted. This justification was drawn from statements made by Do Kwon’s attorney, affirming Do Kwon’s desire to attend the trial, his agreement to extradition from Montenegro, and the possibility of his presence in the United States by mid-March.

The SEC also voiced opposition to holding separate trials for Terraform Labs and Do Kwon, contending that the cases are essentially identical. The regulatory body argued that conducting two distinct trials would unduly necessitate the testimony of whistleblowers and ordinary retail investors on two separate occasions, creating an unnecessary burden.

The decision on whether to change the trial date lies with United States District Judge Jed Rakoff. The SEC has proposed April 15 as the new date, considering scheduling conflicts. Meanwhile, Do Kwon’s lawyer has requested a delay until at least March 18. In a recent statement on Monday, the lawyer conveyed the intent not to seek additional adjournments, even if Do Kwon faced challenges attending on the suggested new date.

The legal matter stems from the collapse of TerraUSD–a “stablecoin” designed to maintain a constant $1 price, and Luna, a more traditional token closely linked to TerraUSD. The approximate loss for both cryptocurrencies amounted to $40 billion or more–a consequence of TerraUSD’s inability to maintain its targeted $1 peg in May 2022.

The SEC subsequently asserted that Terraform and Do Kwon misled investors regarding the stability of TerraUSD and the manner in which a well-known Korean mobile payment application utilized the Terraform blockchain for transaction settlements.

Last month, US District Judge Jed Rakoff ruled that cryptocurrency entrepreneur Do Kwon, along with Terraform Labs, breached United States law by neglecting to register two digital currencies, TerraUSD and Luna, which experienced a collapse in 2022.

Do Kwon is currently confronting related US criminal charges and an extradition request from his home country, South Korea. He was arrested in Montenegro last March.

The SEC’s agreement to delay the civil trial against Terraform Labs and co-founder Do Kwon will allow the suspect to complete the extradition and participate in the trial. 

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About The Author

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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Alisa Davidson
Alisa Davidson

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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