Do Kwon pleads not guilty in US court to fraud charges

A Manhattan hearing today saw Terraform Labs co-founder, Do Kwon, deny charges tied to the TerraUSD collapse.

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

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

Do Kwon ‘misled’ investors

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

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

The charges follow a turbulent year for Kwon, who fled as the Terra blockchain collapse triggered a wave of bankruptcies, including high-profile firms like Three Arrows Capital. 

Interpol issued a Red Notice for his capture, and he was arrested in Montenegro in March 2024 while attempting to board a flight with forged passports.

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

Kwon’s next court appearance is expected to outline further proceedings. His case remains a central topic in discussions about accountability within the cryptocurrency industry.