Terra (LUNA) founder Do Kwon is staying in Montenegrin custody for at least two more months at the request of the United States and South Korea. According to a new Bloomberg report, Terraform Labs co-founder Do Kwon will be held in Montenegro for two more months as officials from the US and Korea seek charges related […]
The post Do Kwon Must Stay Two More Months in Montenegro as Authorities Extend Custody Period: Report appeared first on The Daily Hodl.
Terraform Labs has urged the judge to grant its motion to compel trading data from Citadel Securities, which it says had a hand in the collapse of USTC in May 2022.
Do Kwon-founded Terraform Labs has again pointed the finger at market maker Citadel Securities for its role in an alleged “concerted, intentional effort” to cause the depeg of its stablecoin in 2022.
On Oct. 10, Terraform Labs filed a motion in the United States District Court in the Southern District of Florida to compel Citadel Securities LLC to produce documents relating to its trading actions in May 2022, around the time its stablecoin, now known as TerraUSD Classic (USTC), depegged.
It contends the May 2022 depeg, when the asset crashed from $1 to $0.02, was caused by "certain third-party market participants” intentionally shorting the stablecoin, as opposed to instability in its algorithm.
“Movant [Terraform] contends that the market destabilization that occurred did not result from instability in the algorithm underlying the UST stablecoin,” said the firm in its motion.
“Instead, Movant contends that the market was destabilized due to the concerted, intentional effort of certain third party market participants to “short” and cause UST to depeg from its one dollar price.”
The motion also cites “publicly available evidence” suggesting that Citadel head Ken Griffin intended to short the stablecoin around the time of the depeg.
“There is publicly available evidence suggesting that the head of the Citadel Entities, Ken Griffin, intended to short UST at or about the time of the May 2022 depeg.”
The filing cited a screenshot from a Discord channel chat in which a pseudonymous trader had lunch with Griffin, who allegedly said “They were going to Soros the f*** out of Luna UST,” presumably in reference to George Soros' trading strategies — centered around highly leveraged, one-way bets.
Citadel Securities has however previously denied trading the TerraUSD stablecoin in May 2022, according to Forbes.
Cointelegraph contacted Citadel for additional comment but did not receive an immediate response.
Related: Do Kwon says SEC’s extradition request is impossible
In its motion, Terraform argues that the documents are crucial for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission in February, which alleges Terraform Labs and its founder, Do Kwon, had a hand in “orchestrating a multi-billion dollar crypto asset securities fraud.”
“This defense will be substantially impaired if Citadel Securities is successful in withholding this limited information,” it stated.
If the court refuses to compel Citadel to produce the trading documents, Terraform requested the matter be transferred to the U.S. District Court for the Southern District of New York for decision by Judge Rakoff.
In July, Terraform Labs sought permission from a judge to subpoena data from bankrupt crypto exchange FTX, also claiming the information could help its defense.
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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.
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The SEC seeks to question Daniel Shin on Do Kwon and Chai Corporation’s relationship with Terraform Labs.
The United States Securities and Exchange Commission has been granted a motion to seek assistance from South Korea to question Terraform Labs co-founder Daniel Shin — as it builds its case against the firm and co-founder Do Kwon.
On Aug. 16, District Judge Jed Rakoff granted the SEC’s July 10 motion asking if it could seek to question the Terra co-founder, along with requesting documents from the Seoul-based payments provider Chai Corporation he founded.
In its July filing the SEC said it wishes to question Shin on Kwon’s role at Chai, how Chai used the Terra blockchain and Chai’s disclosures about its relationship with Terraform.
It also wants to know why Chai separated from Terraform. Chai was founded by Shin and Kwon in mid-2019 and shared offices and staff with Terraform until the two firms split in 2020.
Terraform Labs and Kwon didn’t oppose the SEC’s motion and included their own questions and document requests — they have previously denied the SEC’s allegations.
The SEC sued Terraform and Kwon in February alleging its now-collapsed cryptocurrencies TerraClassicUSD (USTC) and Terra Luna Classic (LUNC) — formerly Terra (LUNA) and TerraUSD (UST) — were fraudulent.
It also alleged Kwon and Terraform falsely touted that Chai used the Terra blockchain to process and settle transactions.
The SEC claimed Terraform and Kwon faked transactions of its Korean won pegged stablecoin TerraKRW (KRT) to give the impression that Chai was using the blockchain.
Related: Judge signs order allowing Terraform Labs to subpoena FTX
Terra’s interconnected crypto ecosystem collapsed in May 2022 wiping out around $40 billion in value, bringing the rest of the crypto market with it.
In April, South Korean prosecutors hit Shin with multiple fraud charges alleging he hid the risks of investing in Terraform’s cryptocurrencies.
Kwon is currently in Montenegro serving a four-month prison stint for trying to leave the country using a fake Costa Rican passport.
Along with the SEC’s suit, Kwon also faces criminal charges in the U.S. and South Korea — both countries have requested his extradition.
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Attorneys defending the co-founder of Terraform Labs, Do Hyeong Kwon, also known as Do Kwon, have presented their argument that says the U.S. Securities and Exchange Commission (SEC) has no jurisdiction in the matter. The legal team asserts that U.S. law precludes regulators “from using federal securities law to assert jurisdiction over the digital assets […]
Shin currently faces multiple fraud charges, specifically concerning allegedly hiding risks associated with investing in the in-house tokens by Terraform Labs.
A local court in South Korea denied the prosecutor’s request to issue an arrest warrant for Terraform Labs co-founder Shin Hyun-Seong, also known as Daniel Shin. This was the second attempt made by South Korean authorities to reign in Shin following the recent arrest of Do Kwon — Terra’s other co-founder.
On March 23, Kwon was arrested at Podgorica airport in Montenegro while attempting to use fake documents to fly abroad. The Seoul Southern District Prosecutors Office took advantage of this situation and, on March 27, requested an arrest warrant for Shin, citing his involvement in cashing in illicit profits from Terra (LUNA) and TerraUSD (UST) sales.
However, the Seoul Southern District Court denied the request while citing unconfirmed allegations and the unlikeliness of Shin being a flight risk or destroying evidence, according to local media Yonhap.
Shin currently faces multiple fraud charges, specifically in relation to allegedly hiding risks associated with investing in the in-house tokens by Terraform Labs.
Related: South Korea to examine crypto staking services following the Kraken case
Following Kwon’s arrest in Montenegro, authorities from both the United States and South Korea have tried to extradite the entrepreneur.
As Cointelegraph reported, Montenegrin Justice Minister Marko Kovač said the U.S. made diplomatic efforts to ask for Kwon to be handed over, while South Korean officials have requested extradition.
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“In the case when we receive several extradition requests, I would like to say that determining to which state they will be extradited is based on several factors like the severity of the committed criminal offense, the location and time when the criminal offense has been committed, the order in which we have received the request for extradition and several other factors,” said Kovač through an interpreter.
Federal prosecutors in New York have filed charges against Terraform Labs co-founder Do Kwon hours after his arrest at the Podgorica airport in Montenegro on Thursday. The 12-page indictment from the United States District Court for the Southern District of New York shows that Kwon faces eight counts, which include conspiracy to defraud, two counts […]
The post US Prosecutors Slam Terra (LUNA) Founder Do Kwon With Eight Counts of Fraud for 2022 Crypto Collapse appeared first on The Daily Hodl.
The Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) are reportedly investigating the collapse of the algorithmic stablecoin terra usd (UST) and the firm Terraform Labs. Unnamed sources say that former staff members from Terraform Labs, the company behind the Terra blockchain project, have been questioned by U.S. law enforcement. Unusual Relationship: […]
2022 was a year of phenomenal cryptocurrency blowouts, as several projects collapsed and many more are on life support after the entire ecosystem was shattered. The fallout from these digital currency projects has not only removed billions of dollars in value from the crypto economy, but also eroded trust. The following is a look at […]