- Do Kwon, co-founder of Terraform Labs, yesterday pleaded not guilty to nine charges relating to the collapse of the Terra ecosystem in 2022
- Kwon was finally extradited to the US from Montenegro to face criminal charges, including a newly added count of money laundering
- The 2022 collapse of Terraform Labs’ cryptocurrencies, TerraUSD and luna, led to $40 billion in investor losses and sparked investigations in multiple countries
Former Terraform Labs boss Do Kwon pleaded not guilty to nine counts relating to the collapse of the Terra ecosystem in 2022 following his extradition to the US. A ninth charge, that of money laundering, was added to his rap sheet in advance of his first hearing in Manhattan yesterday, but Kwon denied all of them. Prosecutors labeled the Terra ecosystem a “financial world…built on lies and manipulative and deceptive techniques” which Kwon used to “mislead investors, users, business partners and government regulators regarding Terraform’s business.
Kwon’s Chickens Finally Come Home
The indictments against Kwon were unsealed ahead of his arrival from Montenegro, expanding the accusations to include money laundering alongside the original charges of securities, commodities, and wire fraud. The implosion of Terraform’s flagship tokens, TerraUSD and LUNA, wiped out $40 billion in investments, triggering global investigations and Kwon’s eventual capture in Montenegro on false passport charges
Terraform Labs, once a major player in the cryptocurrency market, saw its fortunes unravel in May 2022 with the collapse of its stablecoin, TerraUSD, and its companion token, LUNA. The crash obliterated $40 billion in market value and sent shockwaves through the crypto industry. Prosecutors allege that Kwon, 33, misled investors and regulators with deceptive claims about Terraform’s products. “Kwon’s constructed financial world was built on lies and manipulative techniques,” the indictment claims.
The fallout also led to legal action from the U.S. Securities and Exchange Commission, which secured a $4.5 billion penalty against Kwon and Terraform Labs in a civil fraud case earlier this year. Despite maintaining his innocence, Kwon has been accused of orchestrating one of the most significant crypto frauds in history.
International Manhunt and Arrest
Kwon’s arrest followed a year-long international manhunt after he fled South Korea amid criminal investigations. In 2023, authorities in Montenegro apprehended him attempting to travel to the UAE using a forged Costa Rican passport. US prosecutors quickly unsealed charges, and Montenegro extradited Kwon to the United States this week following a lengthy back-and-forth with South Korea, which also wants to prosecute him.
Kwon appeared in a Manhattan courtroom on Thursday, pleading not guilty to the charges, setting the stage for an electrifying court case. US Attorney General Merrick Garland stated, “Do Kwon will now be held accountable for his elaborate schemes involving Terraform’s cryptocurrencies.” If found guilty on all counts, Kwon faces a maximum sentence of 130 years in prison. His next court date is set for January 8.
