The US Securities and Exchange Commission (SEC) has given its consent to procrastinating the trial of Terraform Labs and its co-founder Do Kwon, pending Kwon’s extradition. This follows a filing by the SEC on January 15, 2024 in the US District Court for the Southern District of New York. The trial, originally scheduled to begin on January 29, is now proposed to begin no earlier than March 18, 2024.
Kwon, who is currently in Montenegro following his arrest in March 2023, is facing charges for allegedly masterminding a $40 billion cryptocurrency scam. The SEC, fully prepared to proceed with the trial, joined Kwon’s legal team in requesting a stay to ensure his participation in the trial. The Terraform Labs co-founder’s legal team, dealing with extradition complications, suggested Kwon could be in the United States by mid-March. If the trial is delayed, the SEC has requested that it begin on April 15, 2024.
The charges against Terraform Labs and Kwon stem from the collapse of TerraUSD, a stablecoin designed to maintain a constant price of $1, and Luna, a closely related token. Both cryptocurrencies suffered a catastrophic loss in May 2022 when TerraUSD failed to maintain its fixed value, resulting in a market loss of $40 billion or more. This event marked a significant drop in the crypto market that year and had far-reaching implications in the industry.
Additionally, Terraform Labs and Kwon are accused of misleading investors about the stability of TerraUSD and its use in a popular Korean mobile payment app. In addition to the SEC’s civil case, Kwon also faces criminal charges in the US and an extradition request from South Korea. The outcome of this process could significantly impact the cryptocurrency regulatory landscape, given the scale of the alleged fraud and the involvement of multiple international jurisdictions
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