Do Kwon, the co-founder of Terraform Labs, is due to stand trial in 2026 according to his status conference after being extradited to the US. Inner City Press reported The 8th of January is a day to celebrate.
A pretrial conference has been scheduled for Mar. The court has scheduled a pretrial conference for March 6, 2025. All updates are due no later than February 27, 2019. Paul Engelmayer encourages plea talks. Both parties expect the case to proceed to trial.
Federal prosecutors claimed that Terraform’s ecosystem is built upon deceptive tactics. Assistant US Attorney Jared Lenow described Terraform’s operations as a “Potemkin village,” alleging that the company’s products were unstable and required manipulation to sustain their value.
Kwon, he said, misrepresented the stabilty of TerraUSD (UST), the algorithmic stablecoin.
The indictment outlines multiple fraud and securities violations, including counts pertaining to Kwon’s alleged misrepresentation of TerraUSD’s stability. Earlier counts address other aspects of Terraform’s operations.
The defense, led by attorney Michael Ferrara, argues that Terraform’s products were legitimate and functioned as described until market sentiment shifted. Ferrara contended that TerraUSD’s stability relied on demand, which evaporated during a panic.
“He added”
“As long as people wanted it, it would be stable.”
Also, the defense plans to contest admissibility for evidence obtained by international collaboration and search warrants.
Monthly Length
The trial, expected to last four to six weeks, will address foundational questions about crypto’s classification under US law. Prosecutors assert that LUNA, Terra’s ecosystem native token, qualifies as a security, a contention that could have far-reaching implications for the crypto industry.
Defense attorneys, however, argue that Terraform’s tokens do not meet the criteria established under the Howey Test for securities.
Judge Engelmayer made a comment on the legal ferment that has surrounded crypto regulations, and referred to recent decisions in other cases. This included determining that Terraform’s cryptocurrency assets are investment contracts.
Massive evidence
There are massive amounts of evidence in this case, including emails, Slack messages, trading records, video statements, and six terabytes from confiscated devices.
Although both parties acknowledged the complexity of logistics, they have agreed that government will provide all discovery material as soon as possible. The evidence includes recordings made without Kwon’s knowledge, which may raise procedural questions.
In the end, Judge Engelmayer said that reviewing so much material was a daunting task. “daunting”But he stressed the importance of transparency and fairness when it comes to discovery. The US Securities and Exchange Commission had previously sued Terraform Labs for a civil and criminal case that overlapped.
Do Kwon continues to be in detention and is being held currently at a facility affiliated with Essex County New Jersey. The legal team of Do Kwon also has to navigate ongoing investigations, and potentially prosecuted in South Korea. This adds an additional layer of complexity for his defense.
Kwon is accused of orchestrating a crypto-fraud scheme which caused losses in excess of $40 billion when tokens LUNA (LUNA) and TerraUSD crashed in May 2022.
Kwon was on the run after the collapse for about a month before he was apprehended on March 20, 2023 in Montenegro while attempting travel with a fake document.
Kwon spent nearly two years in Montenegrin prison while the US and South Korea battled for Kwon’s extradition. On Dec. 27, 2024, Montenegro’s Justice Minister ended the tug-of-war by The signing of an order Do Kwon should be extradited to the US.
Kwon made an appearance before the court in January 2. Plead Not Guilty over Terra ecosystem collapse.
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