“Challenging the SEC’s request for his interrogation within the United States, Terraform Labs co-founder, Do Kwon, and his legal counsel have approached a federal court. They vehemently seek the rejection of the United States Securities and Exchange Commission’s (SEC) petition to interrogate Mr. Kwon on American soil, pertaining to the Terra ecosystem’s dramatic collapse. In a legal submission dated September 27th, Mr. Kwon’s legal team asserted that the SEC’s plea for his U.S.-based interrogation before October 13th is an unattainable endeavor. This impossibility stems from Mr. Kwon’s current detention in Montenegro, where no predetermined release or extradition date exists. Furthermore, the legal representation for Mr. Kwon contended that supplying a written testimony as a response to the SEC’s inquiries would fundamentally clash with his rights to due process under U.S. law. In their words, ‘A mandate compelling the unattainable serves no pragmatic purpose and carries the risk of undermining the very foundations of judicial authority.’
It is noteworthy that Mr. Kwon’s legal representatives do not categorically oppose a deposition. However, they emphasize that any such proceeding should be held in Montenegro, where the esteemed founder of Terra currently resides on bail. The legal document stipulates that the deadline for discovery in the SEC’s case against Mr. Kwon and Terraform Labs stands at October 13th. Additionally, Mr. Kwon’s legal team has inserted an intriguing detail—they allude to an ‘informal’ indication from a Montenegrin court, suggesting the possibility of a hearing either on October 13th or October 26th, where Mr. Kwon would field the SEC’s inquiries. Nonetheless, the SEC has hinted that it may perceive this process as ‘inadequate’ and may seek an alternative deposition of Mr. Kwon post the discovery cut-off date.
The SEC initiated legal action against Terraform Labs and Mr. Kwon on February 16th, alleging their involvement in a ‘multi-billion dollar crypto asset securities fraud.’ Within the confines of this lawsuit, the SEC posits that Terraform and Mr. Kwon ‘promoted and advertised’ their Anchor Protocol, which, at one juncture, purportedly offered a 20% interest rate on TerraUSD (UST) deposits. Furthermore, it is alleged that Terraform and Mr. Kwon disseminated misleading information to investors regarding the stability of Terra’s stablecoin.
The saga continues, as Mr. Kwon and Terraform Labs’ Chief Financial Officer, Mr. Han Chang-Joon, found themselves under arrest in Montenegro in March 2023. The grounds for their apprehension revolve around purportedly employing false travel documents while attempting to depart the country. Notably, their original passports were confiscated in South Korea in October 2022.”