Gate.io Blog Kwon Seeks Trial Reschedule in SEC vsTerraform Labs case

Kwon Seeks Trial Reschedule in SEC vsTerraform Labs case

23 January 15:40

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![](https://gimg2.gateimg.com/image/article/1700024128RDZZ 1.jpeg)
Do Kwon has applied for a federal judge to postpone his trial to mid-March.

If Judge Jed Rakoff does not accept Kwon’s application he may be tried in absentia.

The US Securities and Exchange Commission (SEC) charged Kwon and Terraform Labs with "orchestrating a multi-billion dollar crypto asset securities fraud."

Keywords: <a href="/tr/price/terra-luna" target="_blank" class="blog_inner_link">Terra</a> Luna Founder, Terraform labs, Do Kwon trial, SEC vs. Terraform, SEC vs. Do Kwon, Terra Luna, Terra crash, Terra Luna case, stablecoin TerraUSD, SEC Extradition Request
## Introduction 
There are several prominent people who have contributed more than anyone else to the development of the industry. Satoshi Nakamoto, Vitalik Buterin and Changpeng Zhao are a few examples of people who have contributed much to the sector.

Nonetheless, other individuals contributed much to the sector but have endured legal battles. People like Zhao, founder and former CEO of Binance, Sam Bankman-Fried, the founder of the collapsed exchange FTX and Do Kwon, [Terra Labs founder, were prosecuted for several misconducts](https://www.gate.io/blog_detail/3436/-sec-lawsuit-against-do-kwon-terraform "Terra Labs founder, were prosecuted for several misconducts") they might have committed in the crypto sphere.

In this blog, we look at the trial of Do Kwon who established the Terra-Luna ecosystem. We will also focus on the past and present legal developments pertaining to him and Terraform Labs.

Read also: [Terra LUNA Tokens Fall Steeply on Do Kwon's arrest](https://www.gate.io/blog_detail/2430/terra-luna-tokens-fall-steeply-on-do-kwons-arrest "Terra LUNA Tokens Fall Steeply on Do Kwon's arrest")
## Kwon Requests Trial Rescheduling  
Kwon, Terra Luna founder, currently imprisoned in Montenegro, has requested a United States court to reschedule his trial on securities fraud charges. The delay will enable him to stand the trial in person.

Presently, Kwon is in Montenegro where he is imprisoned for falsification of travel documents. In a filing which Inner City Press got hold of, Do Kwon’s lawyers recently filed their request to a United States district judge to postpone [Do Kwon trial in the SEC vs.Terraform case](https://www.gate.io/blog_detail/2238/kwon-erreicht-5-sterne-fahndungsstufe-da-die-sec-weitere-betrugsanklagen-erhebt "Do Kwon trial in the SEC vs.Terraform case"). Specifically, Kwon’s legal counsel requested the court to defer the trial to mid-March.
![](https://gimg2.gateimg.com/image/article/17059954451.png)
Source: X.com

The key reason for the request for the trial postponement is that Kwon is seeking permission from the Montenegrin authorities to travel to the United States.

Judge Jed Rakoff of the U.S. District Court for the Southern District of New York will assess the request and make a decision after getting input from the Securities Exchange Commission (SEC) and Terraform Labs. Each of these organizations should have submitted a written proof supporting or rejecting the request by 15 January
## The Court May Conduct the Trial in Kwon’s Absence
If the court rejects Kwon’s request the trial will take place in his absence which may be detrimental to his quest for a fair trial. As per [Cointelegraph’s post on X](https://twitter.com/Cointelegraph/status/1746027697653096593 "Cointelegraph’s post on X"), “Do Kwon requests that if the court denies his request, the jury be informed about his absence and "inability to testify that is not unduly prejudicial to him.”
## Sec Vs. Do Kwon Case
In February 2023 US Securities and Exchange Commission charged Kwon and Terraform Labs with "orchestrating a multi-billion dollar crypto asset securities fraud," following the Terra crash.

In a press statement [the SEC said](https://www.sec.gov/news/press-release/2023-32 "the SEC said"): "We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably [for Luna](https://www.gate.io/learn/articles/what-is-luna/114 "for Luna") and [TerraUSD](https://www.gate.io/price/terra-luna "TerraUSD").”

Commenting on the Terra Luna case,[ Gurbir S. Grewal, Director of the SEC’s Division of Enforcement specifically said](https://www.sec.gov/news/press-release/2023-32 " Gurbir S. Grewal, Director of the SEC’s Division of Enforcement specifically said"), "Today’s action not only holds the defendants accountable for their roles in Terra’s collapse, which devastated both retail and institutional investors and sent shock <a href="/tr/price/waves-waves" target="_blank" class="blog_inner_link">Waves</a> through the crypto markets, but once again highlights that we look to the economic realities of an offering, not the labels put on it."

He added, "As alleged in our complaint, the Terraform ecosystem was neither decentralized, nor finance. It was simply a fraud propped up by a so-called algorithmic “stablecoin” – the price of which was controlled by the defendants, not any code."

As you note, the SEC has never perceived the stablecoin, [TerraUSD crash](https://www.gate.io/blog_detail/1228/following-terra-luna-celsius-network-3ac-take-a-nose-dive "TerraUSD crash"), a result of unforeseeable events and situations that existed in the crypto ecosystem at that time but a creation of Kwon and his Terraform Labs.

In a similar development, in 2022, a [South Korean court filed a lawsuit against Kwon](https://www.gate.io/blog_detail/1191/the-current-investigations-on-terraform-labs-and-founder-do-kwon-following-luna-ust-crash?lang=en "South Korean court filed a lawsuit against Kwon") and several other individuals in the Terra Luna case. The government believed that Terraform Labs, registered in Singapore and operated in South Korea, violated capital market laws.
## Montenegro Court Revokes Extradition Order
The Appeals Court of Montenegro has rescinded the high court decision to allow Kwon to be extradited to either the United States or South Korea. The court said that there were unclear reasons to grant the SEC extradition request. Basically, on 19 December 2023 the [Appellate Court of Montenegro](https://sudovi.me/ascg/sadrzaj/nm4D "Appellate Court of Montenegro") accepted an appeal from Kwon’s defense team.

Regarding this, [Cointelegraph commented](https://twitter.com/Cointelegraph/status/1746027697653096593 "Cointelegraph commented"), “In December 2023, the Appellate Court of Montenegro annulled a decision by the High Court of Podgorica that approved Kwon’s extradition. This development complicates the extradition process to either the U.S. or South Korea.”

As a fact, on 24 November the high court had approved Kwon’s extradition but Kwon, through his legal team, appealed against that ruling. Now, the case has gone for a retrial. Nonetheless, it is important to note that Montenegro has no extradition treaties with the United States or South Korea.

In the meantime, both Kwon and the SEC have filed for a summary judgement for the SEC vs. Terraform legal dispute. Both parties have argued that the opposing side has not substantiated its case sufficiently. The Do Kwon trial was supposed to start at the end of January.

Read alao: [South Korea Regulators Propose Ban on Crypto Purchases Using Credit Cards](https://www.gate.io/blog_detail/3709/south-korea-regulators-propose-ban-on-crypto-purchases-using-credit-cards "South Korea Regulators Propose Ban on Crypto Purchases Using Credit Cards")
## SEC vs. Terraform case Background 
We have looked at the recent developments in the SEC vs. Do Kwon case, now let’s briefly delve into its background. In 2020 Terraform Labs launched TerraUSD (UST), an algorithmic stablecoin which was pegged to the United States dollar, which was, however, backed by Luna, its sister token.

TerraUSD became popular when Kwon launched Anchor Protocol and offered 20% on TerraUSD deposits. By May 2022 their combined value had exceeded $60 billion. Nevertheless, trouble started when the market lost confidence in the stablecoin, [TerraUSD](https://www.gate.io/how-to-buy/terra-luna "TerraUSD").

Things got worse when the stablecoin depegged and traded below 99 cents. Although Kwon and Terraform Labs introduced some measures to stabilize the value, nothing helped. Within a few days both TerraUSD and LUNA had become valueless.

As a result of that Terra Luna debacle, Kwon fled Singapore and South Korea. He was later arrested in Montenegro where was hiding while using a fake passport. 
## Conclusion
Do Kwon has applied for the postponement of his trial in the United States as a result of a delay in his extradition. In the meantime, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York will make a decision on his application. Sadly, there is a possibility that Kwon may be tried in absentia.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

Introduction

Kwon Requests Trial Rescheduling

The Court May Conduct the Trial in Kwon’s Absence

Sec Vs. Do Kwon Case

Montenegro Court Revokes Extradition Order

SEC vs. Terraform case Background

Conclusion

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