Do Kwon, the former CEO of Terraform Labs, is facing a prolonged legal battle, with his legal team now expecting delays in his extradition proceedings from Montenegro. These delays could postpone Kwon’s arrival in the U.S. for his trial with the U.S. Securities and Exchange Commission (SEC) until February or March 2024. Terra‘s collapse in May 2022 led to a severe bear market and the bankruptcy of several large crypto schemes.
SEC Charges and Request for Postponement
Earlier this year, the SEC brought charges against Kwon, accusing him of orchestrating a multi-billion dollar fraudulent scheme involving crypto asset securities. In light of the uncertainties surrounding Kwon’s extradition timeline, his legal counsel has requested a postponement of the SEC trial in the U.S.
According to the SEC’s complaint, Terraform and Kwon raised billions of dollars from investors by offering and selling an inter-connected suite of crypto asset securities, many in unregistered transactions. The SEC’s complaint also alleges that, while marketing the LUNA token, Terraform, and Do Kwon repeatedly misled and deceived investors.
Extradition Delays and Legal Strategies
Kwon’s lawyers, as reported by Inner City Press, noted the slow pace of extradition proceedings in Montenegro. They have raised the possibility that if the court refuses to delay the trial, the jury might be instructed to not view Kwon’s absence and inability to testify as prejudicial against him.
Both Kwon and the SEC have filed motions for summary judgment in the U.S., each asking a federal judge to rule in their favor without a full trial. They argue that the other side has not adequately supported their case. The SEC has also cited the Terraform ruling in its recent lawsuits against major crypto exchanges like Binance and Coinbase.
Legal Troubles and Potential Sentencing
Kwon, arrested earlier for attempting to travel with a counterfeit passport, faces charges from both American and South Korean authorities, including violations of capital markets rules. Dan Sunghan from Seoul’s financial crime investigation bureau suggested in an interview with BNN Bloomberg that Kwon could face decades of imprisonment in both the U.S. and South Korea if convicted.
Other Troubled Crypto Entrepreneurs
Kwon’s situation is reminiscent of other crypto entrepreneurs who have faced legal challenges. Sam Bankman-Fried (SBF) of bankrupt crypto exchange FTX was found guilty and imprisoned in November 2023, while Changpeng Zhao (CZ) of Binance also pleaded guilty over charges of money laundering, with sentencing scheduled for March 2024.
