Terra Money

The Terraform Labs co-founder has pushed back against the SEC’s request to question him in the United States.

Lawyers for Terraform Labs co-founder Do Kwon have requested a federal court to reject the United States Securities and Exchange Commission’s (SEC’s) request to question him in the U.S. over the collapse of the Terra Money ecosystem.

In a Sept. 27 filing, Kwon’s legal team said that the SEC’s request to question him in the United States before Oct. 13 was “impossible” due to being detained in Montenegro with “no scheduled release or extradition date.”

Additionally, Kwon’s team said that providing a written testimony to answer the SEC’s questions would be inconsistent with his right to due process under U.S. law.

“An order mandating something that is impossible serves no practical purpose and risks undermining judicial authority.”

Notably, Kwon’s lawyers claimed that Kwon did not directly oppose a deposition, however noted that it would need to take place in Montenegro, where the UST stablecoin creator is currently out on bail.

According to the filing, the cut off date for discovery in the SEC’s case against Kwon and Terraform Labs is Oct. 13.

Kwon’s legal team added that a Montenegrin court “informally” indicated that it may yet hold a hearing on Oct. 13 or Oct. 26, in which it would ask Kwon the SEC’s questions. However, the SEC noted that it may deem this process to be “inadequate” and pursue another deposition of Kwon after the discovery cut-off date.

Related: SEC seeks to question Terraform Labs co-founder Daniel Shin in Korea

The SEC sued Terraform Labs and Kwon on Feb. 16 for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud.”

Today we charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.

— U.S. Securities and Exchange Commission (@SECGov) February 16, 2023

In the lawsuit, the SEC said that Terraform and Kwon “touted and marketed” its Anchor Protocol, which at one point was advertised to pay out 20% interest on USTC deposits. It also alleged Terraform and Kwon misled investors about the stability of Terra’s stablecoin.

Kwon and Terraform Labs’ chief financial officer Han Chang-Joon were arrested in Montenegro in March 2023 after allegedly using false travel documents when trying to leave the country. The two had their original passports confiscated in South Korea in October 2022.

Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis