Lawyers for Do Kwon, co-founder of Terraform Labs, have asked a federal court to reject a US Securities and Exchange Commission (SEC) request to question him in the US over the collapse of the Terra Money ecosystem.
On September 27th DepositKuhn’s legal team said the SEC’s request to question him in the United States before October 13 is “impossible” due to his detention in Montenegro “with no specific date for release or extradition.”
Additionally, Kwon’s team said that providing written testimony to answer the SEC’s questions would be inconsistent with his right to due process under U.S. law.
“An order that imposes something impossible serves no practical purpose and risks undermining judicial authority.”
It is worth noting that Kwon’s lawyers claimed that Kwon did not directly oppose the filing, but indicated that it should take place in Montenegro, where the creator of the UST stablecoin is currently released on bail.
According to the filing, the discovery deadline in the SEC’s case against Kwon and Terraform Labs is October 13.
Kwon’s legal team added that a court in Montenegro has indicated “unofficially” that it may hold a hearing on October 13 or 26, at which Kwon will be asked questions by the SEC. However, the SEC has indicated that it may consider this process “inadequate” and continue Kwon’s filing again after the discovery deadline.
Related: The SEC seeks to question Terraform Labs co-founder Daniel Shin in Korea
The SEC filed a lawsuit against Terraform Labs and Kwon on February 16 for allegedly “organizing a securities fraud involving billions of dollars in crypto assets.”
Today we charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion-dollar crypto-asset securities fraud involving an algorithmic stablecoin and other crypto-asset securities.
– US Securities and Exchange Commission (@SECGov) February 16, 2023
In the lawsuit, the SEC said Terraform and Kwon “promoted and marketed” their Anchor Protocol, which at one point was advertised to pay 20% interest on USTC deposits. It also alleged that Terraform and Kwon misled investors about the stability of the Terra stablecoin.
Han Changjun, CFO of Terraform Labs, was arrested in Montenegro in March 2023 after allegedly using false travel documents when trying to leave the country. Their original passports were confiscated in South Korea in October 2022.
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