Do Kwon Challenges SEC’s U.S. Questioning Request, Citing Impracticality and Judicial Risks
In a legal twist surrounding the Terra Money ecosystem’s collapse, lawyers representing Terraform Labs co-founder Do Kwon have formally requested that a federal court dismiss the United States Securities and Exchange Commission’s (SEC) request to question their client in the United States. The SEC sought to question Kwon regarding the alleged “multi-billion dollar crypto asset securities fraud” orchestrated by Terraform Labs and Kwon himself.
This latest development came to light through a filing dated September 27, where Kwon’s legal team vehemently opposed the SEC’s request on several grounds. Primarily, they argued that compelling Kwon to appear in the United States before October 13 was “impossible” due to his current detainment in Montenegro, with no scheduled release or extradition date.
The filing underscored the importance of upholding Kwon’s rights, asserting that providing a written testimony to address the SEC’s queries would be inconsistent with his due process rights under U.S. law. The lawyers contended that, “An order mandating something that is impossible serves no practical purpose and risks undermining judicial authority.”
The timing of this dispute is significant, as the cutoff date for discovery in the SEC’s case against Kwon and Terraform Labs is precisely October 13. Kwon’s legal team’s argument could potentially impact the SEC’s investigation, depending on the court’s ruling regarding the request for questioning.
Additionally, the legal team revealed that an informal indication from a Montenegrin court suggested that it might hold a hearing on October 13 or October 26, during which they would pose the SEC’s questions to Kwon. However, the SEC expressed reservations about this process, hinting that it may find it “inadequate” and subsequently seek another deposition of Kwon after the discovery cutoff date.
The SEC initially filed a lawsuit against Terraform Labs and Do Kwon on February 16, alleging their involvement in a massive crypto asset securities fraud scheme. This legal battle has since garnered significant attention in the crypto and regulatory communities, with the outcome holding potentially far-reaching implications for the cryptocurrency industry.
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