NEW YORK, NY — Terraform Labs co-founder and former CEO Do Kwon is bracing himself for a significant legal battle, as his criminal fraud trial in the U.S. is tentatively set to commence next January. This timeline provides both prosecutors and Kwon’s defense ample opportunity to sift through the extensive six-terabyte trove of data expected to be generated during the discovery phase.
During an initial hearing held in Manhattan on Wednesday, lead prosecutor Jared Lenow conveyed to the court that the government anticipates facing additional delays. These delays revolve around challenges in accessing encrypted information and unlocking four cell phones that were provided by Montenegrin authorities upon Kwon’s extradition to the U.S. on December 31st. Furthermore, it was noted that the material extracted from Kwon’s native Korean language will require translation, which adds another layer of complexity to the case.
District Judge Paul Engelmayer of the Southern District of New York (SDNY) humorously remarked, “Sounds like we’re going to be backing up a U-Haul to the Southern District,” alluding to the vast amount of evidence that the court will need to review.
Engelmayer also highlighted that scheduling a trial date more than a year from the initial conference is “unprecedented” in his judicial career. He suggested that Kwon’s lead attorney, Michael Ferrara of Hecker Fink LLP, consult with his client—currently held without bail after spending 22 months in custody in Montenegro—about the possibility of an earlier trial date. The judge granted the defense one week to respond regarding their preference for a trial in 2025.
Kwon’s legal troubles deepened last week when he pleaded not guilty to a nine-count indictment that includes charges of securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering. These charges stem from the catastrophic $40 billion collapse of the Terra/LUNA ecosystem in 2022.
In addition to the criminal charges, Kwon and his company faced civil fraud accusations from the U.S. Securities and Exchange Commission in 2023. Following a guilty verdict by a New York jury, Kwon was ordered to pay substantial penalties amounting to $4.5 billion, with his personal liability reaching $200 million. The ramifications of these legal actions have led Terraform Labs to file for bankruptcy.
As the legal proceedings unfold, the next status conference is scheduled for March 6 at 11 a.m. eastern time. The complexities of Kwon’s case not only underline the challenges of navigating the intricate landscape of financial regulation but also highlight the far-reaching implications of the collapse of one of the most prominent cryptocurrency ecosystems in recent history.
