In a court filing on January 15th with the United States District Court for the Southern District of New York, the SEC expressed its readiness to proceed with Do Kwon’s trial but joined the request to postpone the start date, suggesting that it not begin before March 18th. Do Kwon’s lawyers, currently in Montenegro following his arrest in March 2023, are facing legal challenges related to his extradition to the United States.
Details of Do Kwon’s Trial Delay Request
Do Kwon’s legal team sent a letter to Judge Jed Rakoff on January 11th, requesting the postponement of the January trial until Terraform’s co-founder could participate in his defense in person. They emphasized that the extradition proceedings were taking longer than expected.
While the SEC agreed to the possibility of postponing the trial date, it opposed the separation of Do Kwon and Terraform Labs’ cases. Both were named defendants when the SEC filed charges in February 2023, alleging that they orchestrated fraud related to crypto assets, particularly the tokens formerly known as TerraUSD (UST) and LUNA.
Implications for Witnesses and Investors
Holding two trials would unnecessarily require witnesses, including SEC whistleblowers and individual investors with limited financial means, to testify twice on the same facts in different trials.
The SEC
The SEC highlighted that holding two separate trials would require witnesses, including whistleblowers and investors, to testify twice on the same facts in different trials.
The decoupling of UST (TerraUSD) from the US dollar led to the downfall of several crypto companies, including Voyager Digital, BlockFi, Celsius Network, and likely contributed to the FTX crash.
While waiting for Do Kwon’s availability to participate in person, preliminary motions for the SEC’s case are moving forward. In December, Judge Rakoff granted summary judgment in favor of the SEC regarding Terraform’s dealings with unregistered securities, and in favor of Do Kwon and Terraform for the offering and sale of security-based swaps.
