It seems that the paradigm of regulations within the crypto sphere is facing quite a challenge, best highlighted by the Terraform Labs scenario recently announced. Do Kwon, the co-founder of Terraform Labs, has pushed back against the United States Securities and Exchange Commission’s (SEC) requisition to question him over the Terra Money ecosystem’s collapse. Interestingly, his legal team professes this requisition as an ‘impossibility,’ given Kwon’s detainment situation in Montenegro with no apparent release or extradition date. This situation genders a perplexing dilemma, leaving the SEC grappling with legal intricacies.
It’s crucial to appreciate that written testimony to answer SEC’s questions would breach Kwon’s right to due process under U.S. law. This factor subtly introduces the notion of jurisdictional complexities when documents are considered as testimony. However, Kwon does not directly oppose a deposition, expressing willingness to cooperate, provided it takes place in Montenegro. The predicament here, however, are the potential ‘inadequacies’ the SEC foresees with this process, indicating the possibility of pursuing an additional deposition post the discovery cut-off period.
Kwon’s legal team also dropped hints about a potential hearing being conducted by a Montenegrin court, which would essentially help SEC encompass their desired questioning. Interestingly, the SEC has stated that this might not fulfil their procedural requirements, somewhat anchoring the ongoing regulatory tug-of-war.
On another front, considering the SEC’s allegations of purported multi-billion dollar crypto asset securities fraud against Terraform Labs, a lucrative interest promise of 20% on USTC deposits is a subject of inquiry. The premise here brings further attention to the issue of transparency in advertising and the possible investors’ misled notion about the stability of Terra’s stablecoin.
The human aspect of the matter is equally intriguing, bringing in a subplot connected to the arrest of Kwon and Terraform Labs’ chief financial officer Han Chang-Joon in Montenegro in 2023. Allegedly, they used false travel documents to exit the country, which spur further layers to unfold in this regulatory drama.
The scenario stands out as a significant example of how intricate and complex the issue of crypto regulations can be. It grapples with jurisdictional boundaries, complexities regarding the rights under various laws, and integrity in advertising. Nevertheless, it remains a milestone saga diving headlong into uncharted lands of crypto jurisprudence.
Source: Cointelegraph
