Do Kwon pleads not guilty in US court to fraud charges

Today’s Manhattan hearing saw Terraform Labs co-founder Do Kwon deny accusations related to the TerraUSD crash.

Terraform Labs co-founder and co-founder Do Kwon pleaded not guilty to criminal fraud charges in Manhattan federal court on Thursday after being extradited from Montenegro, according to Reuters.

The charges stem from its role in the collapse of TerraUSD and Luna cryptocurrencies, which wiped out an estimated $40 billion in market value in 2022.

Do Kwon ‘misled’ investors

Federal prosecutors allege that Kwon misled investors about the stability of TerraUSD and claimed that its value in 2021 was protected by a proprietary algorithm. Prosecutors allege that Kwon secretly used a high-frequency trading firm to artificially maintain the stablecoin’s $1 peg, according to Reuters.

The indictment includes charges of securities fraud, commodity fraud, wire fraud, conspiracy and money laundering.

The charges come after a tumultuous year for Kwon, who fled after the Terra blockchain crash triggered a wave of bankruptcies including high-profile firms such as Three Arrows Capital.

Interpol issued a Red Notice for his capture, and in March 2024 he was arrested in Montenegro while trying to board a plane with a fake passport.

Montenegro’s Minister of Justice recently approved Kwon’s extradition to the United States, ending months of legal wrangling between the United States and South Korea, which had both sought to prosecute Kwon. Although Kwon currently faces significant legal challenges in the United States, South Korean authorities continue their investigation; This could lead to a 40-year prison sentence if convicted.

Kwon’s next hearing is expected to summarize future cases. His case remains a central issue in debates about accountability in the cryptocurrency industry.