A Manhattan federal judge has pushed back the United States government’s case against former Terraform Labs chief executive Do Kwon, citing the need for prosecutors to review a substantial influx of new evidence.
Originally set for March 6, the hearing is now rescheduled for April 10, according to a March 3 ruling from Judge Paul Engelmayer.
The decision followed a February 27 letter from prosecutors indicating they expected to provide an additional four terabytes of discovery to the defense.
Newly Acquired Evidence Includes Data from Warrants and Third-Party Documents
The newly acquired material reportedly includes evidence obtained through warrants on several electronic accounts, as well as documents from third-party organizations and individuals.
Prosecutors explained that they had already supplied Kwon’s team with approximately 600 gigabytes of data, including information from four of his cellphones and emails from both his personal and corporate accounts.
Moreover, details related to Kwon’s extradition, the FBI’s retrieval of evidence in Montenegro, statements made to the U.S. Securities and Exchange Commission, and records of digital asset trading activity have been shared with the defense.
The Terra ecosystem’s collapse in May 2022 wiped out an estimated $60 billion in market capitalization.
Its algorithmic stablecoin, TerraClassicUSD (USTC), lost its dollar peg, plummeting below one cent.
The sudden destabilization, accompanied by heavy sell pressure, also contributed to Terra Luna Classic (LUNC) losing the majority of its value.
Kwon, who is of South Korean nationality, spent months traveling between Singapore and Dubai before arriving in Montenegro, where authorities apprehended him in March 2023.
He had allegedly attempted to depart for Dubai using fraudulent travel documents. Following a four-month prison term, negotiations between Montenegrin authorities and the United States resulted in Kwon’s extradition last December.
He made his first appearance before a U.S. court on January 2, pleading not guilty to nine felony counts, all tied to alleged fraud.
Despite the postponement of his next hearing, Kwon’s trial remains on track for January 26, 2026.
Pretrial motions are due by July 1, with responses to those motions required by August 11, as set forth by the court.
Judge Signs Off on $4.5B Terraform, Do Kwon Settlement with SEC
In June last year, U.S. District Court Judge Jed Rakoff of the Southern District of New York (SDNY) approved a settlement that will require Terraform Labs and Kwon to pay a staggering $4.5 billion in disgorgement and civil penalties.
Additionally, they will be permanently banned from engaging in any transactions involving “crypto asset securities,” which includes tokens within the Terra ecosystem.
The settlement came after initial proposals from the SEC suggested a $5.3 billion penalty, which Terraform Labs contested by advocating for a maximum fine of $1 million.
Ultimately, on June 6, the legal representatives for both Kwon and Terraform Labs agreed to the SEC’s revised settlement offer of $4.5 billion.
Terraform Labs, currently operating under Chapter 11 bankruptcy protection, faces the challenge of how to fulfill the substantial financial obligations imposed by the settlement.
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