Lawyers for Do Kwon, founder of the defunct crypto issuer Terraform Labs, have requested a U.S. court to dismiss charges brought against him by the SEC, citing lack of jurisdiction among other reasons, according to court filings from Friday.
Kwon has been on the run since the collapse of his cryptocurrency enterprise in May 2022 and was recently arrested in Montenegro for attempting to travel with falsified documents.
The SEC charged him with securities fraud following his arrest.
In the supporting document for the motion to dismiss the charges, Kwon’s representatives argue that the SEC failed to prove “personal jurisdiction” as the products referenced by the regulator were “available to the world and not directed at U.S. persons.”
Additionally, they assert that the digital asset in question, the stablecoin UST, is a currency and not a security, and thus does not fall under the purview of the SEC.
The filing states, “Congress has not granted the SEC the power to regulate the digital assets at issue here.” The SEC can oppose the motion to dismiss by May 12.
Kwon’s representatives also claim that the company did not conduct any public offerings of securities that would have required SEC registration.
SEC Chief Gary Gensler has been facing criticism over his handling of cryptocurrency regulation, particularly through enforcement actions.
However, Kwon still faces criminal fraud charges by U.S. prosecutors and charges of capital markets law violations in South Korea.
Both countries have requested his extradition, and he must first face trial and possible jail time in Montenegro.