The legal team defending Do Hyeong Kwon, co-founder of Terraform Labs, has argued that the U.S. Securities and Exchange Commission (SEC) has no jurisdiction in the matter of the lawsuit filed against Kwon. Kwon's lawyers claim that U.S. law precludes regulators "from using federal securities law to assert jurisdiction over the digital assets in this case." Kwon faces charges of leading a multibillion-dollar crypto-asset securities fraud filed by the SEC in mid-February 2023, but his lawyers have filed a motion to dismiss the lawsuit, citing the SEC's definition of digital assets as securities is far from clear.

Kwon is currently in custody in Montenegro after his arrest on March 23 for possessing false identification and is at risk of extradition by law enforcement officials from the U.S. and South Korea over the Terra ecosystem's collapse and transactions involving its native assets, UST and LUNA.