Lawyers representing Do Kwon, the co-founder of Terraform Labs, have urged a federal court to reject the U.S. Securities and Exchange Commission's (SEC) request to interrogate him in the United States regarding the Terra ecosystem's collapse.
In a filing made on September 27, Kwon's legal team argued that the SEC's request for an October 13 interview in the U.S. was "impossible" because Kwon was detained in Montenegro, where there was no scheduled release or extradition date.
Moreover, Kwon's legal representatives contended that providing written testimony in response to the SEC's queries would violate his due process rights under U.S. law, stating, "Orders imposing impossible tasks serve no practical purpose and risk undermining the authority of justice."
Notably, Kwon's lawyers emphasized that Kwon did not object outright to testifying but insisted that it must occur in Montenegro, where he is currently out on bail.
The SEC's discovery deadline in its case against Kwon and Terraform Labs falls on October 13, according to the filing.
Kwon's legal team also mentioned that the Montenegrin court had "informally" indicated that a hearing to question Kwon on behalf of the SEC could potentially take place on October 13 or October 26. However, the SEC suggested that it might view this proceeding as "inadequate" and seek another deposition from Kwon after the discovery deadline.
The SEC filed a lawsuit against Terraform Labs and Kwon on February 16, accusing them of orchestrating a "multi-billion dollar crypto-asset securities fraud." The SEC alleged that Terraform and Kwon had deceptively marketed their Anchor Protocol, which had once advertised a 20% interest rate on TerraUSD (UST) deposits. They were also accused of misleading investors about the stability of the Terra stablecoin.
In March 2023, Kwon and Terraform Labs Chief Financial Officer Han Chang-Joon were arrested in Montenegro on charges of using false travel documents while attempting to leave the country. In October 2022, their original passports had been confiscated in South Korea.
