- The SEC’s fraud trial against Terraform Labs and Do Kwon has been postponed to March 2023 to potentially allow Kwon to participate in person if released from detention in Montenegro in time.
- The SEC filed charges in early 2022 alleging Terraform Labs and Kwon perpetrated a multi-billion dollar crypto securities fraud related to TerraUSD (UST) and LUNA tokens, which collapsed in May 2022.
- While the judge granted the SEC summary judgment regarding the unregistered securities dealings, judgment was in favor of Kwon and Terraform regarding the offer and sale of security-based swaps.
The trial between the SEC and Terraform Labs, originally scheduled for January, has been postponed to March. This delay will allow Terraform co-founder Do Kwon, who is currently detained in Montenegro, to potentially participate in person.
Background on the SEC charges
In February 2022, the SEC filed charges against Terraform Labs and Kwon, alleging they orchestrated a multi-billion dollar crypto asset securities fraud related to the TerraUSD (UST) and LUNA tokens.
Collapse of Terra ecosystem
The Terra ecosystem collapsed in May 2022. Kwon’s whereabouts were largely unknown until authorities in Montenegro arrested him in March 2023 for using falsified travel documents. He was sentenced to four months in prison and remains in Montenegro as extradition proceedings continue.
Pretrial motions moving forward
In December, the judge granted summary judgment in favor of the SEC regarding Terraform’s unregistered securities dealings. However, judgment was in favor of Kwon and Terraform regarding the offer and sale of security-based swaps.
Trial postponed to March
The judge has now moved the trial start date to March 25. This could allow Kwon to participate in person if he is released from Montenegro in time. His legal team requested the delay, which the SEC agreed to. The outcome of the high-profile trial remains to be seen.
Conclusion
The SEC’s case against Terraform Labs and Do Kwon continues to progress, albeit slowly. The trial postponement allows Kwon a chance to appear in court, but extradition issues create uncertainty around that possibility. March will bring the next phase of this ongoing saga.
