By
Chimamanda U. Martha
April 19th, 2024
Despite Kwon’s preference to be extradited to South Korea, last week, the Montenegrin High Court ruled in favor of extradition to the US.
Crypto entrepreneur Do Kwon, the co-founder of Terraform Labs, finds himself entangled in a legal quagmire as extradition delays from Montenegro are set to prolong his absence from a U.S. civil trial scheduled for March 25.
Details of Do Kwon’s Trial
Kwon, along with his company Terraform Labs, faces charges from the US Securities and Exchange Commission (SEC) related to alleged fraud in connection with the collapse of the TerraUSD (UST) stablecoin and LUNA in May 2022, resulting in approximately $40 billion in losses within crypto markets.
A recent report from Reuters highlighted that Kwon’s lawyer, David Patton, indicated in a letter filed to a New York federal court on Monday that Kwon does not seek to postpone the trial date, reiterating Kwon’s expressed desire to attend the trial in person despite the extradition hurdles. Originally slated for January, the trial had already been rescheduled to March to accommodate Kwon’s preference for an in-person appearance.
The United States market regulator alleges that Terraform Labs and Kwon misled investors regarding the stability of TerraUSD, a stablecoin pegged to the US dollar, and misrepresented how a popular South Korean mobile payment app utilized Terraform’s blockchain for transaction settlements. Notably, Kwon has consistently denied any wrongdoing concerning these allegations.
The co-founder was arrested at a Montenegrin airport in March of last year for attempting to travel with forged documents. Since then, he has faced related US criminal charges and has remained in Montenegro awaiting extradition.
Kwon’s Legal Proceedings and Extradition Challenges
Despite his preference to be extradited to South Korea, last week, the Montenegrin High Court ruled in favor of extradition to the US. Kwon plans to appeal the decision, citing misinformation regarding the sequence of extradition requests between the US and South Korea.
The extradition process has been fraught with delays and complications, with Kwon’s legal representative, Rodic, attributing the extended timeline to “numerous unanticipated mistakes” made by the lower court in Montenegro. Rodic does not anticipate Kwon’s extradition to occur before the end of March, further prolonging the legal proceedings.
Meanwhile, Terraform Labs has sought refuge in Chapter 11 bankruptcy protection in the United States. Court documents filed in Delaware reveal that the company’s estimated assets and liabilities fall within the range of $100 million to $500 million, with creditors numbering between 100 and 199. The bankruptcy filing adds another layer of complexity to Kwon’s legal predicament and underscores the broader implications of Terraform Labs’ turbulent situation.
As Kwon’s extradition saga unfolds and Terraform Labs navigates bankruptcy proceedings, the crypto community watches closely, recognizing the potential ramifications for investor trust, regulatory oversight, and the future of stablecoin technologies. Amidst the uncertainty, stakeholders await resolution, hoping for clarity in the crypto space, a resolution that will offer a glimpse of hope in an industry with many bankruptcies but few resolutions thus far.