Terraform Labs founder Do Kwon has asked a federal court to reject the U.S. Securities Exchange Commission's request to question him in the U.S. about the catastrophic crash of his company's stablecoins Terra and Luna, a Wednesday court filing shows.
The document, filed on Wednesday in the U.S. District Court for the Southern District of New York, shows Kwon's lawyers are opposing any opportunity for the stablecoin creator to offer testimony to U.S. regulators. The lawyers argue that it would be "impossible" to bring Kwon to the U.S. because he remains detained indefinitely in Montenegro. The former executive, they say, also cannot provide written testimony to the SEC because it would violate his due process rights under U.S. law.
"An order mandating something that is impossible serves no practical purpose and risks undermining judicial authority," Kwon's lawyers said in the filing.
The SEC asked the court last week for permission to interview Kwon about the Terra/Luna collapse before the case's discovery cut off date of October 13.
The SEC sued Terraform Labs in February, alleging the company misled investors about the safety of investing in its TerraUSD stablecoin, which offered yields of up to 20%. TerraUSD's creators told investors the token would maintain its peg to the U.S. dollar through a complicated mint-burn system involving its sister coin Luna. However, both coins crashed in May 2022, wiping out $50 billion in market value.
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