Co-founder Do Kwon Contests SEC’s Slack Communications as Proof in Terraform Labs Case

Do Kwon, co-founder of Terraform Labs, is contesting the United States Securities and Exchange Commission (SEC) regarding Slack messages that have been presented as key evidence in an ongoing legal dispute. These messages, originating from September 2019, feature a conversation between Kwon and his co-founder, Daniel Shin, about potential strategies to enhance investor interest in the Seoul-based payment service, Chai Corporation.

The disclosed chat indicates that Kwon and Shin were brainstorming methods to draw in investors. Chai Corporation, established by Kwon and Shin in mid-2019, maintained close connections with Terraform Labs until their split in 2020. The leaked communications suggest that Kwon intended to manipulate transactions to make them more attractive, stating, “I can just create fake transactions that look real.” He believed these transactions could generate fees and be gradually eliminated as Chai expanded. Kwon also sought discretion, remarking, “I won’t tell if you won’t.” He expressed confidence that investors would struggle to identify these manipulation strategies.

However, Kwon strongly refutes the accusations against him, asserting that the messages have been taken out of context. His legal representatives argue that he and Shin were discussing the option of staking LUNA tokens with validators instead of fabricating Chai transactions. They maintain that the SEC has misrepresented irrelevant evidence to bias Kwon in a procedural motion that is not related to the substantive issues of the case.

In a related development, Kwon’s attorneys are actively opposing the SEC’s request for his extradition to the United States in connection with the collapse of the Terra ecosystem. They describe the extradition request as “impossible” since Kwon is currently detained in Montenegro due to a conviction for passport fraud, with no set release date.

These recent developments have highlighted the legal conflict involving Do Kwon and the SEC. The SEC’s use of the Slack messages as evidence has ignited a vigorous debate, with Kwon and his legal team firmly denying any misconduct and stressing the importance of context. As the case progresses, it remains uncertain how the court will ultimately interpret this evidence and its implications for Kwon’s legal situation. Given the potential consequences for the industry, the cryptocurrency community, regulators, and investors will be closely monitoring the proceedings.

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