SEC's Deposition Request Rejected by Detained Terraform Labs' Do Kwon

By: Eva Baxter

Do Kwon, Terraform Labs co-founder, under detention in Montenegro, has objected to the United States Securities and Exchange Commission's (SEC) request for deposition in the U.S. In light of the unprecedented collapse of the Terra Money ecosystem, the SEC had insisted on Kwon's deposition in the U.S., citing an October 13 deadline. However, this has been labelled as impossible by Kwon's legal team due to his current detainment overseas with no specified release or extradition date.

Kwon's legal counsel argue that providing written testimony in response to SEC's queries goes against Kwon's right to due process as outlined in U.S. law. The counsel have also put forward the idea of conducting the deposition within Montenegro and have made it clear that Kwon did not directly oppose the deposition. They contend that an order which demands an impossible action serves no practical purpose and stands to undermine judicial authority.

Kwon and Terraform Labs were sued by the SEC on February 16 for allegedly orchestrating a multi-billion dollar crypto-asset securities fraud. The lawsuit accused Terraform and Kwon of misleading investors about the stability of Terra's stablecoin and marketing their Anchor Protocol with inflated interest rates on UST deposits. The case, along with Kwon's extradition, continues to be unresolved while Kwon remains in detention abroad.