Do Kwon, the founder of cryptocurrency platform Terra, and his fellow executive Fred Ehrsam are fighting the US Securities and Exchange Commission’s (SEC) request for extradition. The SEC alleges that Kwon and Ehrsam operated Terra and its affiliated token, LUNA, as an unregistered securities offering. The court battle stems from accusations that Kwon and Terra misrepresented the nature of the LUNA tokens, failed to register the issuance of the tokens as required by US law, and misled investors over the platform’s stability and functionality. The SEC put forth the extradition request in early May, and Kwon and Ehrsam are now challenging the demand in court. In documents filed last week, Kwon and Ehrsam claim the SEC’s charges “appear to be based on a misunderstanding of basic facts” and make a number of arguments to challenge the extradition request. Among other things, they suggest that the SEC has failed to provide sufficient documentation to demonstrate that their actions would constitute criminal offenses in both the US and South Korea, an essential element of the extradition request. The documents also contest the allegations that Terra and LUNA were designed as unregistered securities offerings, noting that the platform itself has consistently maintained that both projects are “not securities” and that LUNA holders are not entitled to any form of payment or ownership in the underlying platform. In addition, the documents argue that a CHANGENOW USD-backed stablecoin is a more appropriate comparison to LUNA than conventional securities, and that LUNA is instead a “utility token” – a concept that has been used by other cryptocurrencies as well. As the legal battle over Kwon’s extradition and the Terra/LUNA platform continues to unfold, both the US and South Korea await a ruling from the court that will determine Kwon’s fate.
