US SEC Agrees to Postpone Terraform Labs Trial to Accommodate Do Kwon's Extradition

The U.S. Securities and Exchange Commission has agreed to postpone a civil trial against Terraform Labs and its co-founder, Do Kwon, who are accused of orchestrating a $40 billion cryptocurrency fraud, as per a recent Reuters report. The delay is intended to allow for Kwon's extradition and his presence at the trial.

In a filing made on Monday in a federal court in Manhattan, the SEC justified a "modest" adjournment of the January 29 trial based on Kwon's lawyer's statements. According to the lawyer, Kwon desires to attend the trial, has agreed to extradition from Montenegro, and could potentially be in the United States by mid-March.

The SEC also opposed holding separate trials for Terraform and Kwon, asserting that the cases are essentially identical. The regulatory body argued that having two trials would unnecessarily require whistleblowers and retail investors to testify twice.

The decision on whether to move the trial date rests with U.S. District Judge Jed Rakoff. The SEC has proposed April 15 as an alternative date to accommodate scheduling conflicts.

Kwon's lawyer had initially requested a delay until at least March 18, and on Monday confirmed that no further adjournments would be sought even if Kwon couldn't attend on the proposed new date.

The case revolves around the collapse of TerraUSD, a "stablecoin" designed to maintain a constant $1 value, and Luna, a more traditional token closely linked to TerraUSD. Both cryptocurrencies suffered losses of an estimated $40 billion or more when TerraUSD proved unable to maintain its $1 peg in May 2022.

The SEC alleges that Terraform and Kwon misled investors about the stability of TerraUSD and how a popular Korean mobile payment app utilized the Terraform blockchain for transaction settlements.

In a ruling last month, Judge Rakoff concluded that Terraform and Kwon had violated U.S. law by failing to register TerraUSD and Luna. Additionally, Kwon faces related U.S. criminal charges and an extradition request from his native South Korea. He was arrested in Montenegro in March of the previous year.

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Reuters