Terraform Lab’s Trial to Commence in New York as Kwon Awaits Extradition

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Terraform Lab’s Trial to Commence in New York as Kwon Awaits Extradition – Crypto News

Published

1 year ago

March 25, 2024

Dripp

Terraform Labs and its embattled co-founder Do Kwon will face trial in New York on Monday following charges filed by regulators for the events leading up to the implosion of TerraUSD stablecoin.

According to court documents, the United States Securities and Exchange Commission (SEC) alleges fraud as well as investor deceit on the state of the asset before its subsequent collapse. The company will go into the civil trial as Do Kwon remains in extradition waters in Montenegro.

The case which revolves around the activities before and after the stablecoin lost its peg is among recent litigation efforts by global authorities to protect investors in the market.

Prosecutors Claim Deceit By Terraform Labs

The SEC claims Do Kwon and the company lied to investors before the collapse. Particularly, they claimed that Terraform’s blockchain was adopted by a Korean mobile payments platform. The Commission m asserts that the company made misleading claims to investors on the status of the stablecoin.

Furthermore, prosecutors claim Terraform and Kwon acted in deceit claiming the blockchain was used to settle transactions on the Chai payment platform. Both defendants secretly arranged to procure a third party to buy the stablecoin leading to a price hike after it lost its peg with the dollar in May 2021, a year before the implosion.

The case deepened when the SEC alleged that Kwon claimed the recovery of the stablecoin was due to the asset’s algorithm. On their part, Terraform Labs and Kwon claim the prosecutors are misrepresenting statements while denying any breach.

Do Kwon Awaits Extradition

Meanwhile, Do Kwon remains in Montenegro as he awaits possible extradition to South Korea to face criminal charges. Both the United States and South Korea filed extradition requests to criminally prosecute Kwon for the activities leading to the crash in 2022.

On Friday, a Montenegrin court delayed Kwon’s extradition to South Korea citing steps to clarify the legality of the previous rulings. The former ruling sought to hand Kwon to the United States to face trial on March 25.

In 2022, Terra’s stablecoin lost its peg leading to losses totaling $40 billion and a wider market plunge. These events occasioned the crypto winter heightened with the fall of FTX. These events led to reduced investor confidence and record outflows

Prosecutors seek financial damages imposed on both defendants as well as possible bans.