Why Do Kwon can’t face the SEC in the U.S. — his lawyers tell all – Cryptopolitan

Lawyers representing Do Kwon, the former CEO of Terraform Labs, have pushed back against the U.S. Securities and Exchange Commission’s (SEC) bid to depose him on American soil. The legal team argues that Kwon’s current detainment in Montenegro makes it impossible for him to comply with the SEC’s request. Last week, the SEC had urged the Southern District of New York to grant permission for Kwon’s deposition in the U.S., a move that has now been met with resistance.

Kwon found himself in hot water in Montenegro earlier this year. He was detained in March 2023 and later convicted for using a counterfeit Costa Rican passport in an attempt to exit the country. Consequently, he was sentenced to a four-month jail term in June. Moreover, both the United States and South Korea have submitted extradition requests for Kwon, complicating the legal landscape further.

SEC charges and the collapse of Terra USD

Additionally, the SEC had previously charged Terraform Labs and Kwon in February over the collapse of their algorithmic stablecoin, Terra USD. The regulatory body accused the company and its former CEO of raising billions from investors through the sale of an interconnected suite of crypto asset securities, many of which were unregistered transactions. Terra USD, designed to maintain a stable price through market incentives and algorithms, was linked to Luna, a governance token. However, the stablecoin crashed in May 2022, resulting in the loss of billions for investors.

Algorithmic stablecoins like Terra USD operate by using market incentives and algorithms to maintain a stable price. In the case of Terra USD, it was linked to Luna, a governance token, to keep the prices stable. However, despite these mechanisms, Terra USD faced a catastrophic collapse in May 2022, wiping out billions in investor funds.

Extradition requests add another layer of complexity

The legal entanglements don’t end there. Both the United States and South Korea have expressed interest in extraditing Kwon, adding another layer of complexity to an already intricate case. While the U.S. aims to question Kwon in relation to the SEC charges, South Korea’s intentions remain less clear. This international tug-of-war over Kwon’s extradition could potentially delay legal proceedings and muddy the waters for all parties involved.

In the midst of these developments, Kwon’s legal team remains steadfast in their argument that a U.S.-based deposition is unfeasible due to his detainment in Montenegro. With extradition requests from two countries and a four-month jail sentence already in place, the former CEO finds himself at the intersection of multiple legal challenges.