Terraform Labs co-founder Do Kwon is scheduled to be tried on Jan. 26, 2026, in response to a standing convention following his extradition to the US, Internal Metropolis Press reported on Jan. 8.
The court docket has scheduled a pretrial convention for Mar. 6, 2025, with updates due by Feb. 27. Decide Paul Engelmayer has inspired plea discussions. Nevertheless, each events anticipate the case will proceed to trial.
Federal prosecutors argued that the Terraform ecosystem was constructed on misleading practices. Assistant US Lawyer Jared Lenow described Terraform’s operations as a “Potemkin village,” alleging that the corporate’s merchandise have been unstable and required manipulation to maintain their worth.
He added that Kwon misrepresented the steadiness of the algorithm stablecoin TerraUSD (UST).
The indictment outlines a number of fraud and securities violations, together with counts pertaining to Kwon’s alleged misrepresentation of TerraUSD’s stability. Earlier counts tackle different points of Terraform’s operations.
The protection, led by lawyer Michael Ferrara, argues that Terraform’s merchandise have been reputable and functioned as described till market sentiment shifted. Ferrara contended that TerraUSD’s stability relied on demand, which evaporated throughout a panic.
He added:
“So long as folks wished it, it might be steady.”
The protection additionally plans to problem the admissibility of proof obtained by way of worldwide cooperation and search warrants.
Month-to-month size
The trial, anticipated to final 4 to 6 weeks, will tackle foundational questions on crypto’s classification beneath US regulation. Prosecutors assert that LUNA, Terra’s ecosystem native token, qualifies as a safety, a competition that would have far-reaching implications for the crypto business.
Protection attorneys, nevertheless, argue that Terraform’s tokens don’t meet the standards established beneath the Howey Check for securities.
Decide Engelmayer remarked on the broader authorized ferment surrounding crypto regulation, referencing latest rulings in different circumstances, together with a dedication that a few of Terraform’s crypto belongings have been funding contracts.
Big quantity of proof
The case entails huge proof, together with six terabytes of knowledge from seized units, emails, Slack communications, buying and selling data, and video statements.
The federal government has pledged to supply discovery supplies promptly, however either side acknowledged the logistical complexity. The proof contains recordings made with out Kwon’s data, which can elevate procedural questions.
Because of this, Decide Engelmayer described reviewing such intensive materials as “daunting” however emphasised the necessity for transparency and equity in discovery. He additionally highlighted potential problems from overlapping civil and prison circumstances, together with a previous US Securities and Trade Fee lawsuit towards Terraform Labs.
Do Kwon stays in custody and is presently held at a facility related to Essex County, New Jersey. His authorized staff additionally navigates ongoing investigations and potential prosecutions in South Korea, including one other layer of complexity to his protection technique.
Kwon faces allegations of orchestrating an alleged crypto fraud scheme that precipitated over $40 billion in losses when the tokens LUNA and TerraUSD collapsed in Could 2022.
After the collapse, Kwon stayed on the run for practically a yr earlier than being apprehended in Montenegro in March 2023 whereas trying to journey on a pretend passport.
Kwon remained in Montenegrin custody for practically two years whereas a battle for extradition between the US and South Korea occurred. On Dec. 27, 2024, Montenegro’s Justice Minister ended the tug-of-war by signing an order to extradite Do Kwon to the US.
In a Jan. 2 look in court docket, Kwon pleaded not responsible over Terra ecosystem collapse.
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