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Do Kwon Trial Could Start Without Terraform Founder

Last Updated February 27, 2024 10:09 AM
Teuta Franjkovic
Last Updated February 27, 2024 10:09 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Do Kwon likely misses his US trial due to extradition delays in Montenegro.
  • SEC accuses Kwon and Terraform Labs of misleading investors in TerraUSD and Luna.
  • Kwon denies charges and fights extradition to the US, seeking South Korea instead.

Terralabs founder Do Kwon will probably be absent  from that start of his March 25 civil trial. Kwon will miss the beginning of his hearing on on United States Securities and Exchange Commission (SEC) fraud charges due to extradition delays from Montenegro, according to his lawyer David Patton.

Despite the delay , Patton stated, in a letter to a federal court in New York City that Kwon did not intend to request a postponement of the trial date.

“Deceptive Practices” Led to $40 Billion Crypto Market Loss

The SEC filed a lawsuit against Do Kwon and his company Terraform Labs in February. The case came after the collapse of TerraUSD and Luna cryptocurrencies in May 2022.

The implosion is believed to have triggered approximately $40 billion in losses across cryptocurrency markets. According to the SEC, Terraform and Kwon misled investors about the stability of TerraUSD, which aimed to maintaining a steady value of $1. The regulator also claimed Kwon misrepresented the extent to which a widely-used Korean mobile payment app relied on the Terraform blockchain for transaction settlements.

Do Kwon Refutes Charges Amidst Ongoing Extradition Battle

Do Kwon has consistently denied any wrongdoing.

As well as facing the SEC’s civil charges, he is also dealing with related criminal charges in the United States.

Since his arrest in March 2023, he has been detained in Montenegro. Recently, a court in the Montenegrin capital, Podgorica, ruled that Kwon should be extradited to the United States. This decision was contrary to his preference for extradition to his native South Korea. Kwon is currently appealing this decision.

His local attorney, Goran Rodic, said the court’s ruling was flawed. He argued that it was based on the incorrect assertion that the US submitted its extradition request before South Korea.

Delays in Do Kwon’s Extradition Due to Court Errors, Lawyer States

In a recent development, Rodic, highlighted significant delays in the extradition proceedings in Montenegro due to “numerous unanticipated mistakes” by the lower court. Attached to a letter from David Patton, Rodic’s declaration suggests these errors have unexpectedly prolonged the process, leading to his prediction that Kwon’s extradition, whether to the United States or elsewhere, is unlikely to occur before the end of March.

This news comes in the wake of a December statement by U.S. District Judge Jed Rakoff , who is presiding over the SEC case against Kwon and his company Terraform Labs. Judge Rakoff found that they both breached US law by not registering TerraUSD and Luna, adding a legal layer to the complexities surrounding the Terraform founder’s extradition and the broader implications for cryptocurrency regulation.

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