Terra’s former CEO Do Kwon and his legal team have formally requested a postponement of his trial in the United States. Addressing Judge Jed S. Rakoff, the request for delay is attributed to unexpected slowdowns in the extradition process from Montenegro.
The trial, set to address allegations by the U.S. Securities and Exchange Commission (SEC), now faces potential rescheduling as Kwon’s defense navigates the complexities of international legal procedures.
Kwon’s Legal Team Seeks Trial Postponement Amid Extradition Delays
Do Kwon’s legal team has sent a letter to the Southern District of New York’s court, requesting an adjournment of his upcoming trial. The letter explains that due to unexpected delays in the extradition process, Kwon is unlikely to be returned to the U.S. for trial until at least February or March. This delay has prompted the request for postponing the trial until mid-March to ensure Kwon’s presence.
The legal team emphasizes that while they are aware of the court’s inability to indefinitely delay the trial, a short adjournment would realistically allow Kwon to attend. In preparation for various outcomes, Kwon’s defense is also strategizing for the possibility of the trial proceeding in his absence. They intend to request the court to provide specific jury instructions that would minimize prejudice against Kwon if he cannot attend.
Extradition Setback in Montenegro Leads to Request for Trial Delay
The request for postponement of Do Kwon’s U.S. trial is closely linked to a recent twist in his extradition case in Montenegro. The Podgorica-based Appeals Court has overturned the initial extradition order due to identified procedural errors and ambiguities. As a result, the case has been redirected to the Supreme Court for further examination, as detailed in a report by Bitcoinist.
In the meantime, Kwon remains in detention in Montenegro, with local authorities extending his hold until mid-February. This extension is crucial as it gives the Montenegrin legal system additional time to determine whether Kwon should be extradited to the United States or South Korea.
SEC Charges Against Terra And Kwon
Amidst these international legal proceedings, Do Kwon and Terraform Labs face serious charges from the U.S. Securities and Exchange Commission (SEC). The SEC has accused them of executing a multi-billion dollar crypto asset securities fraud.
Spanning from April 2018 to May 2022, the SEC’s complaint alleges that Terraform Labs and Kwon raised funds through unregistered sales of crypto asset securities. These included “mAssets,” security-based swaps, and the algorithmic stablecoin Terra USD (UST).
The SEC’s case hinges on claims that these offerings attracted billions of dollars from investors through many unregistered transactions.
Furthermore, Terraform and Kwon are accused of misleading investors about the potential value of these tokens. They allegedly claimed that the tokens would increase in value and marketed UST as a “yield-bearing” stablecoin, promising high-interest returns through the Anchor Protocol.
Additional allegations center around misrepresentations regarding the Terra blockchain’s use for settlement transactions by Chai, a popular Korean mobile payment app. There were also claims of deceptive communication about UST’s stability.
The situation escalated when UST dramatically depegged from the US dollar in May 2022, leading to a massive collapse in the price of UST and its associated tokens. This legal battle with the SEC forms a critical backdrop to the ongoing extradition and trial postponement requests involving Kwon.
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