Do Kwon, the embattled former CEO of Terra, has formally requested a postponement of his trial in the United States, citing delays in the extradition process from Montenegro. Kwon’s legal team is seeking an adjournment until mid-March to allow for his return to the US and participation in the proceedings.
The Request for a Delay
In a letter addressed to Judge Jed S. Rakoff of the Southern District of New York, Kwon’s lawyers explained that the extradition process has taken longer than expected, and they now anticipate Kwon’s return to the US in February or March at the earliest. They argue that an adjournment until mid-March would provide a realistic possibility for Kwon to attend the trial and exercise his right to defend himself.
The Significance of Kwon’s Presence
Kwon’s participation in the trial is crucial for several reasons. His presence would allow him to personally address the SEC’s allegations and present his defense strategy. Additionally, his absence could be perceived as a sign of weakness or an unwillingness to face the charges against him.
SEC Charges Against Terraform Labs and Kwon
The trial stems from a lawsuit filed by the US Securities and Exchange Commission (SEC), which alleges that Terraform Labs and Kwon conducted a multi-billion dollar crypto asset securities fraud. The SEC claims that Terraform and Do Kwon raised funds through the sale of unregistered crypto asset securities, including “mAssets,” security-based swaps, and TerraUSD (UST), an algorithmic stablecoin.
The SEC’s Allegations
In its complaint, the SEC outlines several instances of alleged misconduct by Terraform Labs and Do Kwon. These include:
- Offering unregistered crypto assets securities: The SEC alleges that Terraform and Kwon sold unregistered securities to investors, including the Anchor Protocol, which offered high interest yields on UST deposits.
- Making misleading statements about the tokens’ value: The SEC claims that Terraform and Kwon misrepresented the value of Terra’s tokens, falsely claiming that they would increase in value and maintain their peg to the US dollar.
- Misrepresenting the use of the Terra blockchain: The SEC alleges that Terraform and Kwon misled investors about the use of the Terra blockchain for settlement transactions by a popular Korean mobile payment app, Chai.
The Dramatic Collapse of UST
The SEC’s lawsuit is centered on the dramatic depegging of UST from the US dollar in May 2022. The collapse of UST triggered a major sell-off of Terra’s ecosystem tokens, causing billions of dollars in losses for investors.
Conclusion
Do Kwon’s request for a postponement of his trial highlights the complexities of the case and the challenges he faces in defending himself against the SEC’s allegations. The outcome of the trial will have significant implications for the cryptocurrency industry and the regulation of digital assets.
Julia