February 27, 2024 at 13:44 GMTModified date: February 27, 2024 at 13:44 GMT
February 27, 2024 at 13:44 GMT

Do Kwon likely to miss start of his US trial

The Terraform Labs cofounder is facing delays for his extradition to the US from Montenegro.

Do Kwon likely to miss start of his US trial

Do Kwon, the infamous cryptocurrency entrepreneur behind the Terra ecosystem, is likely to miss the beginning of his civil trial in the United States, scheduled for 25 March. This delay stems from complications in extraditing him from Montenegro, as stated by his lawyer, David Patton, according to Reuters.

Despite these setbacks, Kwon, the former head of Terraform Labs, is not seeking to delay the trial date.

The charges against Kwon and his company are rooted in the May 2022 collapse of TerraUSD ($USTC) and Luna ($LUNC) cryptocurrencies. This widespread crash led to significant financial losses, estimated at around $40 billion, shaking the crypto market at its core and plunging the industry into a bear market. 

The US Securities and Exchange Commission’s (SEC’s) lawsuit claims that investors were misled about the stability of TerraUSD, a stablecoin supposed to maintain a constant $1 value.

Do Kwon faces extradition complications and court delays

The process of extraditing Kwon has been filled with “numerous unanticipated mistakes”, according to Goran Rodic, Kwon’s legal representative in Montenegro. He blamed issues with the local courts as the cause of the recent delays. 

Last week, the Montenegrin high court decided to extradite Kwon to the U.S., a move against his wishes to be sent back to South Korea. This decision has sparked controversy, as Kwon’s legal team argues it was based on incorrect information, regarding the prioritisation of extradition requests from the U.S. over South Korea.

Kwon was arrested last March at a Montenegrin airport for possessing forged documents.

Implications of Terra’s Downfall

The SEC’s lawsuit against Kwon and Terraform Labs is based on the alleged deception surrounding TerraUSD, a supposed “stablecoin” pegged to maintain a value of $1. 

The Terra ecosystem, which at its peak held over $20bn in total value locked (TVL), experienced a monumental collapse in May 2022, after the algorithmic stablecoin lost its peg. 

U.S. District Judge Jed Rakoff, who is presiding over the lawsuit against Kwon and Terraform Labs, has previously indicated that they may have also breached U.S. laws by not registering the digital currencies properly.

While Kwon denies any wrongdoing, the case against him includes both civil and criminal charges in the United States.