Terraform Labs Co-Founder Do Kwon to Miss First US SEC Fraud Trial: Report
Do Kwon, the co-founder of Terraform Labs, might miss the commencement of a significant civil trial on U.S. Securities and Exchange Commission (SEC) fraud charges.
According to Reuters, Kwon’s lawyer, David Patton, informed the federal court in Manhattan on Monday that the entrepreneur will likely remain absent from the trial’s initial proceedings due to a delay in his extradition from Montenegro.
Extradition and SEC Fraud Allegations
The development follows a series of legal actions surrounding Kwon and his company Terraform Labs since last February, when the SEC filed a lawsuit against them concerning the collapse of TerraUSD and Luna in May 2022. Allegations from the regulator suggest that the crash resulted in approximately $40 billion in losses within cryptocurrency markets.
The SEC’s complaint accuses Terraform and Kwon of deceiving investors regarding the stability of TerraUSD, a “stablecoin” designed to maintain a constant value of $1, as well as the utilization of the Terraform blockchain in a prominent Korean mobile payment application for transaction settlements. Kwon, however, has vehemently denied any wrongdoing.
Kwon’s legal predicament intensified when he was arrested in Montenegro last March and subsequently faced related criminal charges in the United States. Despite his preference to be extradited to his native South Korea, a court in Montenegro ruled last week that he should be sent to the United States instead.
Do Kwon Faces Extradition Delays
This decision has been met with resistance from Kwon’s legal team, who argue that the ruling was based on flawed information suggesting that the U.S. extradition request arrived first.
In a declaration accompanying Patton’s letter to the federal court, Kwon’s local lawyer, Goran Rodic, highlighted “numerous unanticipated mistakes” errors made by the lower court in Montenegro, leading to prolonged legal proceedings.
Rodic further expressed skepticism regarding Kwon’s imminent extradition, stating that he does not anticipate it will happen before the end of March.
This uncertainty adds another layer of complexity to Kwon’s legal troubles, including a December ruling from U.S. District Judge Jed Rakoff, who found that he and Terraform violated U.S. law for failing to register TerraUSD and Luna.
According to Reuters, Kwon’s lawyer has stated that they will not seek an adjournment of the trial date despite the extradition delays. Patton had also previously made a comparable commitment in January.
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