Legal counsel representing Do Kwon, co-founder of Terraform Labs, has petitioned a federal court to dismiss the United States (US) Securities and Exchange Commission’s (SEC) plea to interrogate him on American soil regarding the Terra Money ecosystem’s collapse.
This legal drama, unveiled in a filing dated 27 September.
Do Kwon’s legal team firmly contends that the SEC’s request for an interrogation prior to 13 October is rendered unfeasible due to his current detainment in Montenegro, where his status remains in limbo without a defined release or extradition timetable.
Moreover, they argue that submitting a written testimony to address the SEC’s inquiries would run afoul of Do Kwon’s sacrosanct right to due process under US law.
His lawyers stated in the filling:
“An order mandating something that is impossible serves no practical purpose and risks undermining judicial authority.”
Significantly, it should be noted that his legal representatives do not categorically oppose a deposition.
Instead, they insist that any such proceedings should occur within the confines of Montenegro, where the creator of the UST stablecoin currently resides on bail.
Within this legal framework, an important milestone looms: the cut-off date for discovery in the SEC’s case against Kwon and Terraform Labs, set for 13 October.
Do Kwon’s legal team points out that the Montenegrin court has indicated, albeit informally, the possibility of holding a hearing on either 13 or 26 October, during which he would field the SEC’s questions.
However, the SEC has raised concerns over the adequacy of this process and hints at pursuing an alternative deposition of Do Kwon after the discovery cut-off date.
The genesis of this legal maelstrom can be traced back to mid-February when the SEC initiated a lawsuit against Terraform Labs and Do Kwon.
The SEC’s allegations cast a shadow of impropriety over both parties, accusing them of orchestrating a multi-billion dollar crypto asset securities fraud.
Specifically, the SEC contends that Terraform and Do Kwon had promoted the Anchor Protocol, at one juncture offering a seemingly tantalising 20% interest rate on USTC deposits.
Furthermore, they assert that Terraform and Kwon had misled investors regarding the stability of Terra’s stablecoin.
This legal saga’s international dimensions came into focus in March 2023, when Do Kwon and Terraform Labs’ Chief Financial Officer, Han Chang-Joon, were detained in Montenegro.
Their apprehension stemmed from allegations of using falsified travel documents while attempting to leave the country.
It is noteworthy that the duo had their original passports confiscated in South Korea back in October 2022.