• Do Kwon is denying SEC allegations that he defrauded investors by selling Terra, his blockchain platform.
• Kwon was recently arrested and is currently being held without bail.
• His legal team claims that Kwon is not a flight threat and should be freed on bail.
Do Kwon Denies Fraudulent Investor Allegations
Do Kwon, the recently arrested CEO of Terraform Labs, denies that he defrauded investors and says that SEC allegations are unfounded. He is accused of raising $25 million through a fraudulent security offering of his blockchain platform, Terra. According to the Wall Street Journal, Do Kwon’s lawyers have asked for the judge to throw out the SEC’s lawsuit on the grounds that it had exceeded its authority by failing to prove US investors were defrauded.
Troubling Arrest of Do Kwon
Kwan was recently arrested by US authorities in Montenegro while attempting to board a plane with false travel documents to Dubai and is currently being held without bail. Both the US and South Korea are seeking extradition. The filing by the lawyers asserts: “The SEC’s improper assertion of power here by trying to shoehorn all cryptocurrencies into its definition of a ‘security’ fails.”
What Is Terra?
Terra is a platform for creating stablecoins which are cryptocurrencies pegged to stable assets like the US dollar. Investors were told they would get a return from Terra’s stablecoin UST when investing in this platform which has now been deemed as fraudulent securities offering according to the SEC’s investigation into Do Kwan’s activities.
Kwan’s defence strategy appears mainly based on what his lawyers are saying claiming an abuse of power by the executive branch in terms of failing to agree on what constitutes cryptocurrency as security under federal law. The filing further argues: “The SEC’s improper assertion of power here by trying to shoehorn all cryptocurrencies into its definition of a ‘security’ fails”.
US And South Korea Seek Extradition
US authorities argue that Kwan is a flight threat and could flee whereas his legal team claims he should be released on bail as there is no evidence suggesting he poses any risk in this regard. As such both countries are seeking extradition proceedings against him with no resolution yet reached at this stage regarding his release or otherwise from detention pending trial hearings set for later this month