Judge Delays SEC's Landmark Case Against Kwon Until March; No Additional Adjournment Requests Will Be Considered

A federal judge declared the postponement of the trial of the U.S. Securities and Exchange Commission's (SEC) $40 billion fraud case against the blockchain firm Terraform Labs and its co-founder and CEO Do Kwon until March following a request from the crypto executive's camp.

U.S. District Court for the Southern District of New York, Judge Jed Rakoff moved the start date of the SEC v. Terraform Labs trial to March 25 from the initial Jan. 29 start date.

The judge, in his decision, also underlined that the court will not entertain adjournment requests from any party.

"The Court will indulge his counsel's request given their express recognition that the trial cannot be further postponed. Accordingly, the trial is hereby moved to March 25, 2024, at 9:30 AM.1 No further requests from any party for any further adjournment will be entertained," the court filing read.

Last week, Kwon's camp sought an adjournment of its SEC case trial, citing procedural delays in his extradition process from Montenegro.

"Mr. Kwon wishes to attend his trial. Counsel had hoped the extradition proceedings in Montenegro would proceed more quickly than they have. Unfortunately, it now appears that Mr. Kwon is not likely to be extradited until February or March at the earliest. We understand the Court cannot put the trial on hold indefinitely, but an adjournment until mid-March would provide a realistic possibility for Mr. Kwon to attend. For these reasons, Mr. Kwon does not waive his right to attend and requests a short adjournment of the trial date to allow for his attendance," Kwon's lawyers said.

Earlier this week, the SEC agreed to postpone the civil litigation involving Kwon, which is strategically aimed at facilitating Kwon's extradition, thereby ensuring his presence during the trial.

The SEC also opposed two separate trials for TFL and Kwon, underscoring that the cases were virtually the same. It would unduly compel the whistleblowers and average retail investors to testify twice, which is unnecessary because of the overlap in cases, the agency said.

In February 2023, the financial regulator initiated legal action against Kwon and Terraform Labs, accusing them of executing an extensive securities fraud involving several billion dollars.

This allegation is specifically tied to the cryptocurrency assets LUNA and TerraUSD (UST), which are at the center of the controversy.

In May 2022, Terra, which at the time, ranked as the third-largest cryptocurrency ecosystem following Bitcoin and Ethereum, experienced a rapid collapse over three days.

This abrupt downturn resulted in a wipeout of approximately $50 billion in market valuation.