Terraform’s Do Kwon challenges US extradition request

abdelaziz Fathi

Do Kwon, the crypto entrepreneur and former CEO of Terraform Labs, is opposing the U.S. Securities Exchange Commission’s request to question him about the crash of his company’s stablecoins Terra and Luna.

Terraform founder Do Kwon

Kwon’s lawyers argue that it is impossible to bring him to the U.S. because he is detained indefinitely in Montenegro, and providing written testimony would violate his due process rights under the federal law.

“An order mandating something that is impossible serves no practical purpose and risks undermining judicial authority,” Kwon’s lawyers said in the filing.

The SEC requested permission from the court to interview Do Kwon, the founder of Terraform Labs, about the Terra and Luna stablecoin collapse. The agency alleges that Terraform Labs misled investors about the safety of its TerraUSD stablecoin, which crashed in May 2022, causing massive losses for investors.

The SEC is seeking to interview Kwon before the discovery cut-off date of October 13 as part of its ongoing investigation.

Back in June, Do Kwon was handed a four-month prison sentence by a court in Montenegro for allegedly using a false passport. Han Chong-joon, Kwon’s associate and Terra’s former finance officer, faced similar charges of fabricating official documents and was sentenced to the same four-month prison term. The Montenegro Basic Court stated on its website that the duration of their pretrial detention would be considered in the sentencing process.

Do Kwon, who is currently facing allegations of multibillion-dollar fraud in the United States and is also wanted by South Korean authorities on similar charges, was apprehended in March. The arrest occurred at the airport in Podgorica, the capital of Montenegro, as he was attempting to board a flight to Dubai. As it happens, he was then taken into custody on suspicion of his identity by local police.

Both US and South Korean officials are seeking to extradite Terraform Labs CEO Do Kwon. Prosecutors in New York charged the 31-year-old entrepreneur with eight criminal indictments for defrauding American investors who purchased Terra USD and Luna.

Also in February, the US Securities and Exchange Commission accused Do Kwon with fraud, alleging that he orchestrated a multibillion-dollar crypto asset securities fraud. The SEC alleges that Kwon marketed the so-called “algorithmic stablecoin” TerraUSD and a series of inter-connected digital assets as profit-bearing securities, claiming that the tokens would increase in value.

Globally, investors in TerraUSD and Luna lost an estimated $42 billion. Worse still, the meltdown has shaken confidence in the broader cryptocurrency industry and led to the failure of several major crypto companies including crypto lender Celsius and crypto fund manager Three Arrows Capital.

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