Do Kwon, the founder and former CEO of Terraform Labs, the company behind the failed stablecoin TerraUSD (UST), may soon be extradited to the US to face charges from the Securities and Exchange Commission (SEC), according to a report by the Wall Street Journal.
Kwon has been detained in Montenegro since March after he was accused of using fake travel documents to enter the country.
He was sentenced to four months in prison in June, but legal appeals and diplomatic negotiations delayed his extradition.
The SEC has sued Kwon and Terraform Labs for allegedly offering and selling unregistered securities in the form of UST tokens, which were supposed to be pegged to the US dollar but collapsed in value in February, triggering a $40 billion crash in the crypto market and causing massive losses for investors and lenders.
Kwon also faces criminal charges in his home country of South Korea, where he is accused of fraud and violating the capital markets laws.
Also, the country of South Korea has requested his extradition, but Montenegro has reportedly decided to send him to the US instead.
The decision was made by Montenegro’s Justice Minister Andrej Milovic, who said that the public would be informed of the decision promptly.
It was approved by a court last month, but Kwon tried to appeal it, according to local media reports.
Kwon’s lawyers have argued that he is innocent and that UST tokens are not securities, but rather a decentralized and innovative technology that benefits the global economy.
They’ve also claimed that Kwon’s deposition to the SEC is impossible due to his imprisonment and that he should be released on bail.
See also: Montenegro Court Approves Extradition of Terra and LUNA Founder Do Kwon
Conversely, the SEC has asked Judge Jed Rakoff to rule on the securities issue without a jury trial, saying that the evidence is clear and undisputed.
The SEC has also alleged that Kwon and Terraform Labs misled investors and regulators about the nature and risks of UST tokens and that they failed to register them as required by law.
The case is one of the most high-profile and controversial examples of the regulatory crackdown on the web3 sector, which has seen a surge of innovation and adoption in recent years, but also a lot of uncertainty and volatility.
The outcome of the case could have significant implications for the future of web3 and the crypto industry.
