Terraform Labs Trial Postponed Amid SEC Drama, Potential Relief for Do Kwon

Key Points:

• SEC trial, initially set for January 29, moved to March 25 at Do Kwon’s request.
• Kwon seeks to defend himself in the “multi-billion dollar crypto asset securities fraud” case.
• Charges revolve around alleged fraud related to TerraUSD (UST) and Terra tokens.

Federal judge has rescheduled the highly anticipated United States Securities and Exchange Commission (SEC) case against Terraform Labs trial, shifting the trial’s start date to March 25.

This decision comes in response to a request from Do Kwon, a key figure in the case, who sought the opportunity to personally assist in his defense.

Judge Jed Rakoff, presiding over the U.S. District Court for the Southern District of New York, acknowledged the uncertainty surrounding Kwon’s release from extradition proceedings in Montenegro. Despite this, the judge accommodated the plea from Do Kwon’s legal team, allowing the SEC to join the request for the trial postponement.

Terraform Labs’ SEC Trial Delay, Kwon’s Uncertain Participation!

Originally slated to commence on January 29, the trial pertains to charges filed by the SEC in February 2023 against Terraform Labs and Kwon. The allegations center around an alleged “multi-billion dollar crypto asset securities fraud,” specifically related to tokens previously known as TerraUSD (UST) and Terra.

The Terra ecosystem faced a collapse in May 2022, leading to a period of uncertainty regarding Kwon’s whereabouts. In March 2023, Montenegro authorities arrested Kwon for using falsified travel documents, subsequently sentencing him to four months in prison. As of the current update, Kwon remains in Montenegro, with ongoing extradition proceedings between the U.S. and Montenegro.

While the possibility of Kwon’s participation in the SEC case in person remains uncertain, pretrial motions have progressed. In a significant development in December, Judge Rakoff granted summary judgment in favor of the SEC regarding Terraform’s dealing with unregistered securities. Simultaneously, judgments were rendered in favor of Kwon and Terraform for the offer and sale of security-based swaps.