Terraform Labs CEO Do Kwon is unlikely to face criminal charges in the U.S. over the collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST), according to legal experts. They explained that civil charges are more likely, including lawsuits by cryptocurrency investors.
Do Kwon is unlikely to face criminal charges
The recent collapse of cryptocurrency terra (LUNA) and stablecoin algorithm terrausd (UST) has raised questions about whether their creator, Do Kwon, can be held responsible.
Randall Eliason, a professorial lecturer in law at the George Washington University Law School who spent 12 years as an assistant U.S. attorney for the District of Columbia, explained that Kwon is unlikely to be criminally prosecuted, CNBC reported Thursday.
Stressing that prosecutors must prove criminal acts beyond a reasonable doubt, he reportedly said: ‘It’s not like a homicide where you bring in witnesses to testify about who pulled the trigger.’
The legal expert described:
We’re trying to prove what was going on in someone’s mind. That’s often a very painstaking process.
He explained that the process “involves reviewing a lot of documents, talking to a lot of people and dealing with all of their attorneys throughout this process and scheduling grand jury time and court appearances. “.
Renato Mariotti, a former federal prosecutor and trial attorney, stressed that prosecutors have to prove the defendant’s state of mind beyond a reasonable doubt, stating that they “often rely on emails, texts, tweets and other statements.”
Eliason cited the example of Theranos and former CEO Elizabeth Holmes. In this case, they told investors that they were using their own machines to analyze blood samples when in reality they were using other companies’ machines to perform tests. Eliason said:
Things like that are pretty suggestive of intent to actually deceive and defraud versus just misjudgments, mistakes, or other lesser forms of misconduct.
Unlike criminal cases, the burden of proof for civil cases is much lower and generally based on a preponderance of the evidence. According to the preponderance standard, the burden of proof is satisfied when the party bearing the burden convinces the investigator that there is more than a 50% chance that the allegation is true.
Eliason detailed:
Frequently, in these kinds of cases, the appropriate remedies end up being civil, regulatory, and administrative — and actually not criminal.
Civil cases could include lawsuits from crypto investors. In South Korea, a class action lawsuit has already been filed against Kwon, his company Terraform Labs and the company’s co-founder.
In the U.S., Kwon is already in trouble with the U.S. Securities and Exchange Commission (SEC). He dodged a few subpoenas earlier this year and filed a motion opposing the regulator.
“There are many other potential agencies or governments that could take a look at this conduct, in addition to individuals who have been harmed,” the legal expert noted, adding:
There is going to be issues with jurisdiction … since he’s not in the U.S. South Korean authorities might have something to say about possible sanctions.
