Terraform Labs co-founder Do Kwon pleads not guilty in US court

Do Kwon, the co-founder of Terraform Labs, has pleaded not guilty to US fraud charges related to the $40 billion Terra LUNA crash in 2022. Just two days ago, authorities in Montenegro extradited him in the USA

According to a Bloomberg report, the embattled co-founder faces nine finance-related charges, including money laundering conspiracy, commodity, wire and securities fraud.

Do Kwon pleads not guilty

U.S. Magistrate Judge Robert Lehrburger presided over the court hearing, which was announced on January 2. Although he pleaded not guilty through his lawyer, the South Korean fugitive agreed to be detained. It is not yet known whether the court will consider Kwon’s plea agreement or progress toward a criminal trial.

Notably, the US Attorney’s office in Manhattan, which will prosecute the troubled co-founder of Terraform Labs, was also behind the prosecution of FTX co-founder Sam Bankman-Fried (SBF) last year. SBF, meanwhile, is currently serving a 25-year prison sentence for the cataclysmic FTX accident at the end of 2022.

As of March 2023, Kwon was facing eight counts of financial violations. However, US Attorney Damian Williams stated in a court document that the Terraform Labs executive conspired with several entities to commit money laundering. As a result, Kwon currently faces nine charges, considerably higher than SBF’s seven charges.

A case of two years

Kwon’s legal troubles date back to May 2022, when Terraform Labs’ flagship products, TerraUST and Terra LUNA, crashed. It led to a $40 billion meltdown in the crypto market, triggering a chain of events that led to the crash of FTX later that year.

Kwon has been on the run ever since. Last year, Montenegrin authorities arrested the co-founder of Terraform Labs while trying to board a flight to Dubai with a fake passport. He spent four months in prison for using a fake ID in the country.

At the same time, South Korean and US authorities requested Kwon’s extradition. Both countries faced an extradition battle over Kwon. Finally, the Montenegrin government revealed in late December 2024 that the troubled crypto figure had been extradited to the US to face fraud charges.

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