Terraform Labs Trial Is Now Postponed, Pending Do Kwon Extradition

Key Points:

• The Terraform Labs trial, accused of a $40 billion crypto fraud, is delayed to March 25 for Kwon’s extradition from Montenegro.
• The SEC alleges deception by Terraform and Kwon regarding the collapse of Terra USD stablecoin, causing a $40 billion loss in May 2022.
• Legal challenges in Montenegro have led to delays in Kwon’s extradition, impacting the trial’s timeline.

According to Reuters, a federal judge in Manhattan postponed the trial against Terraform Labs and co-founder Do Kwon, accused of a $40 billion cryptocurrency fraud linked to the collapse of algorithmic stablecoin Terra USD.

Terraform Labs Trial Delayed Pending Do Kwon Extradition in $40 Billion Fraud Case

Originally set for January 29, the Terraform Labs trial has been rescheduled for March 25 to allow time for Kwon’s extradition from Montenegro.

Do Hyeong Kwon, facing fraud claims from the Securities and Exchange Commission (SEC), had represented his consent to extradition, but U.S. District Judge Jed Rakoff emphasized there’s no absolute guarantee of his timely release.

Despite this uncertainty, the judge, acknowledging the Terraform Labs trial’s inability to be further postponed, granted the delay as requested by Kwon’s counsel.

The SEC’s civil case alleges deception by Terraform and Kwon regarding the stability of TerraUSD, a stablecoin designed to maintain a $1 price, and the traditional token Luna. The collapse of TerraUSD in May 2022 resulted in both cryptocurrencies losing an estimated $40 billion.

The SEC contends that investors were misled about TerraUSD’s stability and the role of a popular Korean mobile payment app in utilizing the Terraform blockchain for transactions.

Kwon, arrested in Montenegro last March, faces related U.S. criminal charges and an extradition request from South Korea. A recent ruling by Judge Rakoff found Terraform and Kwon in violation of U.S. law for not registering TerraUSD and Luna.

Kwon’s extradition, previously delayed, faces further complications after a Montenegro high court’s decision was successfully appealed, leading to a retrial due to procedural issues. The Terraform Labs trial delay ensures Kwon’s potential participation pending his extradition.