A civil trial in the U.S. on alleged fraud involving disgraced co-founder of cryptocurrency firm Terraform Labs, Kwon Do-hyeong, began on Monday without the defendant in attendance, as the destination of his extradition has yet to be decided.

According to Reuters and Bloomberg, legal counsel for the U.S. Securities and Exchange Commission(SEC) said during the trial at the U.S. District Court for the Southern District of New York that the Terra cryptocurrency was a fraud and a "house of cards," and when it collapsed, investors lost almost everything.

The SEC filed the civil suit against Kwon in November 2021, accusing the 32-year-old and Terraform Labs of deceiving investors about Terra's stability, causing massive financial losses estimated to surpass 40 billion U.S. dollars.

Terraform Labs' legal counsel claimed during Monday's trial that the SEC is relying solely on evidence in its favor and testimonies from witnesses hoping for whistleblower compensation after the SEC's trial win.

Kwon's lawyer claimed that his client had never described the cryptocurrency as being risk free and that he had never deceived anyone, adding failure is not fraud.

Kwon, who has been detained in Montenegro after using a fake passport last March, is awaiting the country's top court ruling on a lower court decision for his extradition to South Korea. The U.S. had also sought his extradition.