The Legal Battle Unfolds as TerraUSD Collapse and Luna Token Crisis Take Center Stage in the Case.
The US Securities and Exchange Commission agreed to delay a civil trial against Terraform Labs and co-founder Do Kwon for allegedly orchestrating a $40 billion (roughly Rs. 3,32,329 crore) cryptocurrency fraud, so that Kwon can be extradited and attend.
In a Monday filing in Manhattan federal court, the SEC said a “modest” adjournment of the January 29 trial was justified, based on statements from Kwon’s lawyer that Kwon wanted to attend, agreed to extradition from Montenegro, and could be in the United States by mid-March.
It also opposed separate trials for Terraform and Kwon, saying the cases were virtually the same, and that two trials would unnecessarily require whistleblowers and ordinary retail investors to testify twice.
US District Judge Jed Rakoff will decide whether to move the trial date. The SEC asked for April 15, to accommodate scheduling conflicts.
Kwon’s lawyer sought a delay until at least March 18, and on Monday said he would not seek further adjournments even if Kwon were unable to attend on the new date.
The case stems from the collapse of TerraUSD, a “stablecoin” designed to maintain a constant $1 price, and Luna, a more traditional token closely linked to TerraUSD.
The Securities and Exchange Commission (SEC) has alleged that Terraform Labs Pte Ltd and its founder, Do Kwon, deceived investors about the stability of TerraUSD, resulting in both TerraUSD and Luna losing an estimated $40 billion or more in May 2022 when TerraUSD failed to maintain its $1 peg. The SEC claimed that Kwon and Terraform misled investors regarding TerraUSD’s stability and how a popular Korean mobile payment app utilized the Terraform blockchain for transaction settlements.
In a previous ruling, a judge found that Terraform and Kwon violated U.S. law by not registering TerraUSD and Luna. Kwon is also facing criminal charges in the U.S. and an extradition request from South Korea, where he was arrested in March. The case is being heard in the U.S. District Court, Southern District of New York.