Thursday, July 18, 2024

The attorneys representing Do Kwon, the co-founder and erstwhile CEO of Terraform Labs, posit that the United States Securities and Exchange Commission (SEC) is not in a position to successfully conduct a deposition of Kwon, describing the endeavor as “unfeasible.” Furthermore, Kwon’s legal team asserts that the SEC’s request for a preclusion order is untimely, especially considering that neither party has yet filed a summary judgment motion, and the deadline for such filings is still one month away.

Kwon’s Legal Team Asserts SEC’s Deposition Effort ‘Unfeasible’

A legal filing submitted to the court on September 22, 2023, discloses that the SEC is endeavoring to gain permission to question Do Kwon, the former CEO of Terraform Labs. The court filing underscored, “With fewer than 30 days remaining in the discovery phase, the SEC has yet to utilize a crucial tool of discovery common in nearly all civil cases—the deposition of the defendant.”

A subsequent court filing by Kwon’s attorneys on September 27 emphasizes their position that fulfilling such a request from the SEC is “unfeasible,” and recommends that the commission’s application be dismissed.

“The SEC’s application aims to secure permission to conduct a deposition of Defendant Do Kwon on U.S. soil prior to October 13, 2023. This, despite the SEC’s awareness that Mr. Kwon is currently detained in Montenegro with no definite date for release or extradition,” the legal counsel for the former CEO noted. They further argued:

The application ought to be rejected as conducting a deposition under these circumstances would be unfeasible for Mr. Kwon.

Kwon’s arrest in Montenegro in March 2023 followed the collapse of the Terra blockchain ecosystem he previously led, which occurred in May 2022. He was arrested for using fraudulent passports and has since spent four months in the Montenegro prison system. His lawyers stressed that Kwon has already undergone intense questioning on multiple occasions. They specifically highlighted a rigorous 21-hour questioning session Kwon participated in, spanning two separate days, as part of a two-year detailed investigation by the SEC.

This line of inquiry occurred across two different days, with Kwon actively participating for five hours each day. This was supplemented by a separate five-hour questioning session led by the Monetary Authority of Singapore, in which the SEC also participated. Kwon’s legal team also pointed to an additional voluntary six-hour session with the SEC, as detailed by the lawyers from Dentons US LLP.

Kwon’s attorneys maintain that the “SEC’s application rests on inaccuracies concerning immaterial evidence to bolster its unfounded claim that it has been unable to secure discovery from Mr. Kwon.” Both South Korean and U.S. authorities have been seeking Kwon’s extradition in relation to his alleged role in the unraveling of the Terra blockchain ecosystem and the destabilization of the UST stablecoin.

What are your views on Kwon’s legal team’s assertion that it is “unfeasible” for the SEC to depose the founder of Terra? We welcome your insightful perspectives on this matter in the comments section below.

Frequently Asked Questions (FAQs) about Do Kwon SEC Deposition

What is the core issue between Do Kwon and the SEC?

The core issue revolves around the U.S. Securities and Exchange Commission’s (SEC) attempt to depose Do Kwon, the co-founder and former CEO of Terraform Labs. Kwon’s legal team contends that such a deposition is “unfeasible” given that Kwon is currently detained in Montenegro.

Who is Do Kwon?

Do Kwon is the co-founder and former CEO of Terraform Labs, the organization behind the Terra blockchain ecosystem. He was arrested in Montenegro in March 2023 over the use of fraudulent passports and has been detained there since.

What is a preclusion order and why is it considered premature?

A preclusion order is a legal directive that prevents one or both parties from introducing certain evidence or making specific arguments in a case. Kwon’s legal team argues that the SEC’s request for a preclusion order is premature because neither party has yet filed a summary judgment motion, and the deadline for such filings remains a month away.

What is the stance of Kwon’s legal team on the SEC’s deposition request?

Kwon’s legal team has described the SEC’s deposition request as “unfeasible.” They argue that conducting a deposition would be impossible given Kwon’s ongoing detention in Montenegro, and they recommend that the SEC’s application for the deposition be dismissed.

What evidence has Kwon’s legal team provided regarding his interactions with the SEC?

Kwon’s attorneys have highlighted that Kwon has already undergone extensive questioning by the SEC as part of their two-year investigation. This includes a rigorous 21-hour questioning session that took place over two separate days, along with other additional voluntary sessions.

Have other authorities sought Do Kwon’s extradition?

Yes, authorities from both South Korea and the United States have sought Kwon’s extradition in connection with his alleged role in the downfall of the Terra blockchain ecosystem and issues related to the UST stablecoin’s de-pegging.

What happened to the Terra blockchain ecosystem?

The Terra blockchain ecosystem, previously led by Do Kwon, collapsed in May 2022. This led to Kwon’s arrest in March 2023 in Montenegro. He is currently detained and facing legal proceedings.

Where is Do Kwon currently?

Do Kwon is currently detained in Montenegro. He has no scheduled release or extradition date at the moment.

More about Do Kwon SEC Deposition

  • U.S. Securities and Exchange Commission
  • Terraform Labs Official Website
  • Legal Proceedings in Civil Cases
  • Montenegro Legal System
  • Extradition Laws Between South Korea and the United States
  • Summary Judgment in U.S. Courts
  • Monetary Authority of Singapore
  • Dentons US LLP Official Website
  • UST Stablecoin Information

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9 comments

EconomyWatcher September 29, 2023 - 12:05 am

Honestly, this saga is far from over. With South Korea also involved, I can’t even begin to imagine how complicated the extradition proceedings will be.

Reply
TechFanatic September 29, 2023 - 5:13 am

interesting article. So, Kwon’s lawyers say the SEC is basing their motion on irrelevant evidence. That’s a bold move, wonder how it’ll play out.

Reply
Fiona_M September 29, 2023 - 10:02 am

if hes detained, how can they even think of deposing him? The SEC needs to think this thru.

Reply
JennyQ September 29, 2023 - 11:46 am

If he’s already been questioned for 21 hrs by the SEC, what more do they want? Seems like they’re piling on at this point.

Reply
CryptoSteve September 29, 2023 - 11:57 am

Isn’t this the guy who led Terra? Man, how the mighty have fallen. Now he can’t even face deposition from the SEC. Crazy times we’re in.

Reply
GlobalCitizen September 29, 2023 - 3:15 pm

It’s not just a U.S. issue anymore, it’s clearly become international. The SEC, South Korea, and now Montenegro? This case is spanning continents.

Reply
MikeJ87 September 29, 2023 - 8:17 pm

Wow, this is really heating up. So the SEC can’t even depose Do Kwon cause he’s stuck in Montenegro? What a mess.

Reply
SarahT September 29, 2023 - 9:14 pm

I can’t believe Do Kwon is in this deep. First Terra collapses and now he’s fighting the SEC while in detention? That’s gotta be tough.

Reply
LawStudent91 September 29, 2023 - 10:13 pm

I’m curious about the legal implications here. If Kwon is detained in another country, how does that affect the SEC’s jurisdiction? Any legal eagles here?

Reply

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