Godfrey Benjamin
Terraform Labs co-founder Do Kwon has been found liable for fraud in a United States government lawsuit over the collapse of the firm in 2022.
SEC Sues For Liability Charges Against Terraform Labs
Following a two-week-long trial in New York, the court came to the conclusion that Do Kwon and Terraform Labs misled investors in the event that led to the loss of up to $40 billion in cryptocurrencies. This, in turn, armed the United States Securities and Exchange Commission (SEC) in its crackdown movement against crypto entities.
Per a Bloomberg report, it was discovered that Kwon and Terraform Labs made a false claim that popular Korean payment application Chai made transactions using Terraform Labs’ blockchain technology. Additionally, the jurors noted that investors were not duly informed about the instability status of the UST stablecoin. Do Kwon and Terraform Labs went as far as telling investors that the stablecoin is algorithmically pegged to the U.S. dollar.
The SEC has asked the jury for a finding of liability and the court to award civil penalties to the defendants. This would include payment of ill-gotten gains and prejudgment interest. This is another interesting case involving the SEC and a high-profile crypto firm following SBF’s 25-year sentence a few days ago.
Do Kwon Extradition Case Nearing Its End
Meanwhile, there has been some back and forth in the Do Kwon/Terraform Labs lawsuit. The young crypto entrepreneur was arrested in Montenegro about a year ago after he tried to leave the country in disguise. Since that time, the Montenegrin authorities have been considering whether to extradite Kwon to the U.S. or South Korea. Notably, he has criminal charges against him in both countries.
There is a high likelihood that his trial will be in New York especially after the Balkan nation’s Supreme Court reversed previous decisions including handing him over for trial in his native country. The decision was made after the prosecutors’ appeal of the appellate court’s rejection of Kwon’s legal team’s appeal.
The Supreme Court emphasized how necessary it is for the High Court in Podgorica to make an individual evaluation of the legal grounds for extradition.
Do Kwon’s extradition to either the U.S. or South Korea remains a decision for the High Court to make.
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