Terraform Labs co-founder, Do Kwon, pleaded not guilty to multiple criminal fraud charges in a Manhattan federal court today, following his extradition from Montenegro. The charges relate to the catastrophic collapse of the TerraUSD and Luna cryptocurrencies, which wiped out approximately $40 billion in market value in 2022.
Kwon’s plea came after being arrested in Montenegro in March 2024 while attempting to board a flight with forged travel documents. This arrest followed months of international pursuit, culminating in a high-profile legal battle over his extradition, with both the United States and South Korea seeking to prosecute him for his role in the scandal.
The charges against Kwon include securities fraud, commodities fraud, wire fraud, conspiracy, and money laundering. Prosecutors allege that Kwon misled investors by falsely claiming the TerraUSD stablecoin was supported by a proprietary algorithm. Investigators also assert that Kwon employed a high-frequency trading firm to artificially maintain the coin’s $1 peg, a move that allegedly concealed the true instability of the project.
Kwon’s involvement in the TerraUSD collapse also led to widespread financial turmoil, triggering bankruptcies of prominent firms such as Three Arrows Capital. The fallout from this incident has sparked ongoing debates about accountability in the cryptocurrency industry.
The case marks a significant chapter in the broader efforts to regulate and scrutinize the crypto sector. Kwon’s legal challenges are far from over, with South Korea continuing its investigation, where he could face up to 40 years in prison if convicted.
Kwon’s next court date will address the progression of the case, keeping the cryptocurrency world on edge as the legal proceedings unfold.
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