- Do Kwon, Terraform Labs co-founder, is contesting the SEC’s request to interrogate him in the U.S.
- Kwon’s legal team said the attempt was “impossible” given his apprehension in Montenegro and should be done in that country
- The SEC’s discovery deadline for the case is October 13, with the possibility of further depositions beyond that date
Do Kwon, co-founder of Terraform Labs, is challenging the Securities and Exchange Commission’s (SEC) request to question him in the U.S. regarding the Terra ecosystem’s collapse. Kwon’s legal team filed a request, asserting that questioning him in the U.S. by October 13 is “impossible” as he is currently detained in Montenegro without a set release or extradition date. They also argued that providing written testimony would violate his U.S. due process rights.
Kwon Operated “Multi-billion Dollar Crypto Asset Securities Fraud”
The SEC sued Kwon in February, accusing the co-founder of “orchestrating a multi-billion dollar crypto asset securities fraud.” The former CEO has been accused of hiding the truth over the stability of the UST stablecoin, which imploded in May last year, with the SEC saying that Kwon knew it had the potential to be volatile, and also that he offered unregistered securities through the platform.
Allegations include promoting the Anchor Protocol, which promised a 20% interest rate on TerraUSD (UST) deposits and misleading investors about Terra’s stablecoin stability. Kwon and Terraform Labs’ CFO, Han Chang-Joon, were arrested in Montenegro in March 2023 for allegedly using false travel documents as their original passports were confiscated in South Korea in October 2022.
SEC Has Until October 13 to Complete Discovery
While Kwon did not outright oppose a deposition in the case, his lawyers suggested that it should occur in Montenegro, where he is out on bail. The SEC’s deadline for discovery in the case against Kwon and Terraform Labs is October 13.
Kwon’s legal team mentioned that a Montenegrin court informally indicated a potential hearing on October 13 or October 26 to ask Kwon the SEC’s questions. However, the SEC expressed concerns about the adequacy of this process and may seek another deposition of Kwon after the discovery cut-off date.