Terraform Labs co-founder Do Kwon’s legal team has filed a request with a federal court to deny the United States Securities and Exchange Commission’s (SEC) request for his interrogation in the United States regarding the Terra ecosystem’s collapse.
In a filing dated September 27, Kwon’s legal representatives argued that the SEC’s demand for questioning in the U.S. before October 13 was unfeasible due to Kwon’s current detention in Montenegro, where there is no established release or extradition timeline.
Moreover, Kwon’s defense asserted that providing written testimony to address the SEC’s inquiries would violate his right to due process under U.S. law, stating that “an order mandating something that is impossible serves no practical purpose and risks undermining judicial authority.”
Notably, Kwon’s legal team clarified that Kwon did not outright oppose a deposition but suggested that it should be conducted in Montenegro, where the Terra founder is currently out on bail.
The filing highlighted that the cut-off date for discovery in the SEC’s case against Kwon and Terraform Labs is October 13.
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Kwon’s lawyers also noted that a Montenegrin court had “informally” indicated the possibility of holding a hearing on October 13 or October 26, during which Kwon would be asked the SEC’s questions.
However, the SEC indicated that it might consider this process as “inadequate” and could pursue another deposition of Kwon after the discovery cut-off date.
The SEC had filed a lawsuit against Terraform Labs and Kwon on February 16, alleging their involvement in a “multi-billion dollar crypto asset securities fraud.”
According to the SEC, Terraform and Kwon promoted their Anchor Protocol, which at one point promised a 20% interest rate on TerraUSD (UST) deposits, while also misleading investors about Terra’s stablecoin’s stability.
Kwon and Terraform Labs’ chief financial officer, Han Chang-Joon, were arrested in Montenegro in March 2023 for allegedly using false travel documents while attempting to leave the country.
Their original passports had been confiscated in South Korea in October 2022.
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