The lawyers representing Terraform Labs co-founder Do Kwon reportedly argued in court against the allegations pressed by the US Securities and Exchange Commission (SEC). The federal agency had sued Kwon for allegedly defrauding US investors by illegally offering unregistered securities.

On April 21, Do Kwon’s lawyers asked the judge to dismiss the SEC lawsuit claiming that the regulator’s acquisitions were unfounded. While requesting to dismiss the lawsuit, Kwon’s lawyers asserted that US law prohibits regulators “from using federal securities law to assert jurisdiction over the digital assets in this case,” reported Bloomberg.

In addition, the lawyers claimed that the SEC failed to prove that Kwon had defrauded US investors in connection with Terra’s $40 billion collapse of the TerraUSD (UST) and Luna (LUNA) cryptocurrencies. According to the lawyers, the stablecoin at issue is a currency, not a security.

The legal proceedings began when Do Kwon was arrested in Podgorica airport, Montenegro on March 23, while attempting to fly to Dubai using fake documents. Following his arrest, both South Korean and American authorities requested the entrepreneur’s extradition.

At the time of writing, it remains unclear as to which country, if any, would be the most likely to be granted the extradition of Kwon.

Related: Do Kwon lawyers received $7 million before Terra collapse: Report

The Seoul Southern District Court recently denied an arrest warrant for Terraform Labs co-founder Shin Hyun-Seong.

While prosecutors saw Kwon’s arrest as an opportunity to pin down Shin, the court denied the request while citing unconfirmed allegations and the unlikeliness of Shin being a flight risk or destroying evidence.

“In the case when we receive several extradition requests, I would like to say that determining to which state they will be extradited is based on several factors like the severity of the committed criminal offense, the location and time when the criminal offense has been committed, the order in which we have received the request for extradition and several other factors,” said Montenegrin Justice Minister Marko Kovač through an interpreter.

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