5 months ago
Terraform Labs co-founder Do Kwon is scheduled to beryllium tried connected Jan. 26, 2026, according to a presumption league pursuing his extradition to the US, Inner City Press reported connected Jan. 8.
The tribunal has scheduled a pretrial league for Mar. 6, 2025, with updates owed by Feb. 27. Judge Paul Engelmayer has encouraged plea discussions. However, some parties expect the lawsuit volition proceed to trial.
Federal prosecutors argued that the Terraform ecosystem was built connected deceptive practices. Assistant US Attorney Jared Lenow described Terraform’s operations arsenic a “Potemkin village,” alleging that the company’s products were unstable and required manipulation to prolong their value.
He added that Kwon misrepresented the stableness of the algorithm stablecoin TerraUSD (UST).
The indictment outlines aggregate fraud and securities violations, including counts pertaining to Kwon’s alleged misrepresentation of TerraUSD’s stability. Earlier counts code different aspects of Terraform’s operations.
The defense, led by lawyer Michael Ferrara, argues that Terraform’s products were morganatic and functioned arsenic described until marketplace sentiment shifted. Ferrara contended that TerraUSD’s stableness relied connected demand, which evaporated during a panic.
He added:
“As agelong arsenic radical wanted it, it would beryllium stable.”
The defence besides plans to situation the admissibility of grounds obtained done planetary practice and hunt warrants.
Monthly length
The trial, expected to past 4 to six weeks, volition code foundational questions astir crypto’s classification nether US law. Prosecutors asseverate that LUNA, Terra’s ecosystem autochthonal token, qualifies arsenic a security, a contention that could person far-reaching implications for the crypto industry.
Defense attorneys, however, reason that Terraform’s tokens bash not conscionable the criteria established nether the Howey Test for securities.
Judge Engelmayer remarked connected the broader ineligible ferment surrounding crypto regulation, referencing caller rulings successful different cases, including a determination that immoderate of Terraform’s crypto assets were concern contracts.
Huge magnitude of evidence
The lawsuit involves monolithic evidence, including six terabytes of information from seized devices, emails, Slack communications, trading records, and video statements.
The authorities has pledged to supply find materials promptly, but some sides acknowledged the logistical complexity. The grounds includes recordings made without Kwon’s knowledge, which whitethorn rise procedural questions.
As a result, Judge Engelmayer described reviewing specified extended worldly arsenic “daunting” but emphasized the request for transparency and fairness successful discovery. He besides highlighted imaginable complications from overlapping civilian and transgression cases, including a anterior US Securities and Exchange Commission suit against Terraform Labs.
Do Kwon remains successful custody and is presently held astatine a installation associated with Essex County, New Jersey. His ineligible squad besides navigates ongoing investigations and imaginable prosecutions successful South Korea, adding different furniture of complexity to his defence strategy.
Kwon faces allegations of orchestrating an alleged crypto fraud strategy that caused implicit $40 cardinal successful losses erstwhile the tokens LUNA and TerraUSD collapsed successful May 2022.
After the collapse, Kwon stayed connected the tally for astir a twelvemonth earlier being apprehended successful Montenegro successful March 2023 portion attempting to question connected a fake passport.
Kwon remained successful Montenegrin custody for astir 2 years portion a conflict for extradition betwixt the US and South Korea happened. On Dec. 27, 2024, Montenegro’s Justice Minister ended the tug-of-war by signing an order to extradite Do Kwon to the US.
In a Jan. 2 quality successful court, Kwon pleaded not guilty implicit Terra ecosystem collapse.
The station US tribunal schedules Do Kwon’s assemblage proceedings for January 2026 appeared archetypal connected CryptoSlate.
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