The trial between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs, along with its former top executive, has been postponed, according to a report by Reuters. The delay has been approved by the SEC due to the decision of Terraform Labs’ co-founder, Do Kwon, to attend the trial. This article will analyze the reasons behind the trial postponement and its potential implications.
Initially scheduled for January 29, the trial between the SEC and Terraform Labs has been pushed back to April 15. The SEC agreed to a “modest” delay after Kwon expressed his intention to attend the trial. Kwon, who is currently in Montenegro, has agreed to extradition and is expected to arrive in the U.S. by mid-March. This development follows earlier reports on January 11, when Kwon’s lawyers requested a trial delay to March 18, nearly one month earlier than the SEC’s suggestion. However, Kwon’s lawyer stated that no further adjournments would be sought if Kwon is unable to attend. The final decision on the trial delay rests with Judge Jed Rakoff, the presiding judge in the case.
In its latest filing, the SEC expressed its opposition to holding separate trials for Terraform Labs and Kwon. The SEC argued that the two cases are nearly identical and conducting separate trials would result in repeated testimony. Although the specific court filing cited by Reuters is currently unavailable to the public, it is anticipated that both parties agree with the SEC’s stance. Neither the SEC nor Terraform Labs have issued any official comments on the matter.
The SEC initially charged Terraform Labs in February 2023, accusing the crypto company of committing billions of dollars worth of fraud. While the case remains ongoing, a judge ruled in favor of Terra and the SEC on two separate issues in December. Notably, Kwon, the co-founder of Terraform Labs, is currently serving a prison sentence in Montenegro for passport fraud. His release is anticipated before February 15, which means that he may be extradited for the upcoming trial.
The decision to postpone the trial between the SEC and Terraform Labs, as well as the inclusion of Kwon in the proceedings, raises significant questions about the potential impact on the outcome. The delay allows Kwon to actively participate and defend himself against the allegations of fraud, which may bear weight in the final judgment. The SEC’s objection to separate trials for Terraform Labs and Kwon indicates that consolidation of the cases is deemed necessary to avoid repetition of testimonies. As the trial date approaches, it remains to be seen how Judge Rakoff will rule on the trial delay and whether any further developments unfold in this high-profile case.
The SEC’s decision to delay the trial against Terraform Labs and its former executive, coupled with the intent of Do Kwon to attend the trial, demonstrates the importance of ensuring both parties can present their case fully. With the trial rescheduled to April 15 and the possibility of Kwon’s release from prison, the outcome of this case may be influenced by these latest developments.