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- It is reported that the case between the US Securities and Exchange Commission and Terraform Labs has been postponed to March.
- SEC has also called on the court to stop its plan of staging two separate trials, claiming they are similar.
According to the latest report, the court has postponed the case between the US Securities and Exchange Commission and Terraform Labs. It is reported that the delay is to enable authorities to extradite Terraform’s Do Kwon from Montenegro. This means the trials would take place in March 2024.
Reuters disclosed that the case was originally supposed to take place on January 29, however, the possibility of the defendant appearing at the court was deemed low, making the Agency call for a “modest” adjournment. It is also reported that Kwon has agreed on extradition, and has declared his willingness to attend trials.
Interestingly, U.S. District Judge Jed Rakoff in Manhattan has stated that there is still no guarantee that Kwon will be released in time. For this reason, trials would no longer be postponed if he fails to show up.
Despite Kwon’s representation that he has consented to his extradition from Montenegro, where he is presently being held, there is no absolute guarantee that he will be released in time. Nevertheless, the court will indulge his counsel’s request given their express recognition that the trial cannot be further postponed.
More on the SEC and the Terraform Case
Two separate trial was also planned for the case, however, the SEC has opposed this, claiming the cases are similar. According to them, two separate trials could make way for whistleblowers and retail investors to testify twice.
SEC sued Terraform and Kwon in February 2023 and called the yield-bearing Anchor Protocol and the LUNA token securities.
Terraform and Kwon also misled investors about one of the most important aspects of Terraform’s offering – the stability of UST, the algorithmic ‘stablecoin’ purportedly pegged to the U.S. dollar. UST’s price falling below its $1.00 ‘peg’ and not quickly being restored by the algorithm would spell doom for the entire Terraform ecosystem, given that UST and LUNA had no reserve of assets or any other backing.
Kwon was arrested at the Podgorica airport, and a quick search led to the discovery that he had a Costa Rica passport. He was sentenced to 4 months in prison in Montenegro. However, both South Korea and the US are fighting for his extradition.
Kwon faces eight criminal charges in the US including “securities, commodities, and wire fraud.” he also faces civil charges from the SEC for leading a crypto fraud that led to a substantial loss in April 2018 and May 2022. In Both the US and South Korea, he has been charged with alleged crypto fraud that led to a $40 billion market value loss.
Legal crypto expert David Lesperance spoke about the extradition process.
It is a long process. In some cases, extradition can be done simply by agreement between two governments. It’s a long process that allows appeals, etc, and for those reasons, governments try to often circumvent extradition…We’re just kicking him out! He’s not working, he has no status here, he’s not a Montenegrin citizen, he’s not a resident, he has no status here as a visitor. We’re done with him now. So now we’re going to kick him out.
