The U.S. Securities and Exchange Commission (SEC) has agreed to delay the trial of Terraform Labs and its co-founder Do Kwon pending Mr. Kwon’s extradition. This is according to a filing filed by the SEC with the U.S. District Court for the Southern District of New York on January 15, 2024. The trial, originally scheduled to begin on January 29, is now proposed to begin on March 18, 2024..
Kwon, who is currently in Montenegro following his arrest in March 2023, is accused of facilitating a $40 billion cryptocurrency fraud. The SEC, fully prepared to proceed with the trial, joined Kwon’s legal team and requested a postponement to ensure his participation in the trial. The Terraform Labs co-founder’s legal team, which handles the complexities of extradition, suggested Kwon could arrive in the United States by mid-March. If the trial is postponed, the SEC has requested that the trial begin on April 15, 2024..
The charges against Terraform Labs and Kwon stem from the collapse of TerraUSD. stablecoin Luna is a closely linked token designed to maintain a constant price of $1. Both cryptocurrencies suffered catastrophic losses in May 2022 when TerraUSD failed to maintain its peg, resulting in a market loss of over $40 billion. This event marked a severe downturn in the cryptocurrency market that year and had far-reaching implications for the industry..
Additionally, Terraform Labs and Kwon were accused of misleading investors about the stability of TerraUSD and its usage in South Korea’s popular mobile payment app. In addition to the SEC’s civil suit, Mr. Kwon has also faced criminal charges in the U.S. and is also receiving an extradition request in Korea. The outcome of this trial could have a significant impact on the regulatory environment for cryptocurrencies, given the scale of the alleged fraud and the involvement of multiple international jurisdictions.
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