The U.S. Securities and Exchange Commission (SEC) agreed to delay the civil trial against Terraform Labs and its co-founder Do Kwon.
The decision aims to allow time for Kwon’s extradition from Montenegro, ensuring his attendance at the trial. The case involves allegations of orchestrating a $40 billion cryptocurrency fraud.
In a filing with the Manhattan federal court, the SEC acknowledged the need for a “modest” postponement of the trial, initially scheduled for January 29. The move comes after statements from Kwon’s lawyer indicating Kwon’s intention to attend the trial, his agreement to extradition, and his potential arrival in the United States by mid-March.
The SEC also argued against holding separate trials for Terraform Labs and Kwon, stating that the cases are essentially identical. Conducting two trials would unnecessarily compel whistleblowers and retail investors, who were impacted by the alleged fraud, to testify twice.
U.S. District Judge Jed Rakoff is set to determine the new trial date. The SEC has proposed April 15 as a suitable date, considering scheduling conflicts. Meanwhile, Kwon’s legal representation has requested a delay until at least March 18 and assured that no further adjournments would be sought, even if Kwon is unable to attend by the new date.
The legal proceedings against Kwon have been ongoing since last year. In December, an appeals court in Montenegro overturned an earlier decision to extradite Kwon to South Korea and the U.S. The SEC trial against him and Terraform Labs is currently scheduled for January 29.
The SEC has charged Terraform Labs and Kwon with orchestrating a “multi-billion dollar crypto asset securities fraud,” particularly focusing on the collapse of the algorithmic stablecoin TerraUSD in 2022. South Korean prosecutors have leveled similar accusations against Kwon and Terraform affiliates.
Kwon was arrested in March last year at an airport in Montenegro for attempting to travel with forged documents. Kwon, who is the founder of Terraform Labs, testified that he believed the passports were legitimate.
Many enforcement authorities and financial regulators, as well as the Interpol, were already on the hunt for Kwon for his alleged involvement in the collapse of terraUSD (UST) stablecoin and the Terra ecosystem.
