- The U.S. Securities and Exchange Commission (SEC) has asked for a “modest” extension of the trial date initially set for January 29 involving Kwon and Terraform.
- The request is based on commitments from Kwon’s defense stating that he agreed to extradition from Montenegro and could be present in the U.S. by mid-March.
- Separate trials for Kwon and Terraform opposed by the SEC, arguing that both cases hold similar arguments and separate trials would require whistleblowers and retail investors to testify twice.
- The judge will decide on moving the trial to April 15, as per SEC’s request.
- The trial originates from the downfall of TerraUSD and Luna, two cryptocurrencies linked with Terraform which lost $40 billion in value.
- The SEC accuses Terraform and Kwon of deceiving investors about the stability of TerraUSD.
- Kwon also faces related criminal charges and an extradition request from South Korea.
The SEC’s Position
The SEC, in a filing done on a recent Monday at a Manhattan federal court, argued that a minor delay of the scheduled Jan. 29 trial was sensible. This argument is backed up by comments from Kwon’s defense that Kwon has decided to show up, concurs with extradition from Montenegro, and might arrive in America by mid-March.
Singular or Separate Trials
The SEC also contradicted the idea of separate trials for Terraform and Kwon. It argued that the cases were almost identical, and that bifurcation would needlessly cause whistleblowers and regular retail investors to testify two times.
Rescheduling and Delay Request
The U.S. District Judge Jed Rakoff is set to decide on whether to reschedule the trial. The SEC requests for a new date on April 15, to align with scheduling conflicts. In response, Kwon’s lawyer has pushed for a delay until at least March 18. He further stated that he wouldn’t seek any additional delays, even if his client, Kwon, isn’t able to make it at the newly scheduled date.
The Origin of the Case
The trial originates from TerraUSD’s and Luna’s fallout, both of which are cryptocurrencies that are closely tied to Terraform. The cryptos lost an estimated $40 billion or more in value when TerraUSD failed to keep its $1 peg in May 2022.
According to the SEC, Terraform and Kwon misled investors about the stability of TerraUSD, and about how a well-known Korean mobile payment application utilized the Terraform blockchain to finalize its transactions.
Violation of Law and Other Charges
Judge Rakoff ruled last month that Terraform and Kwon violated American law by failing to register TerraUSD and Luna. Besides, Kwon faces related criminal charges in the U.S., as well as an extradition request from his native South Korea. He was apprehended in Montenegro last March.
The case is documented as SEC v Terraform Labs Pte Ltd et al, U.S. District Court, Southern District of New York, No. 23-01346.
The outcome of this trial could have significant ramifications for the trading of Terraform-related assets and other cryptocurrencies tied to financial mobile applications. Therefore, it is essential for investors keeping close tabs on the crypto market to monitor the developments of this case.