Do Kwon, the South Korean entrepreneur behind the disastrous collapse of cryptocurrencies TerraUSD and Luna, pleaded not guilty to fraud charges in the United States on Thursday following his extradition from Montenegro.
Do Kwon Pleads Not Guilty to US Fraud Charges in $40 Billion Crypto Crash
Kwon, co-founder of Singapore-based Terraform Labs, faces a nine-count indictment in Manhattan federal court that includes charges of securities fraud, wire fraud, commodities fraud and conspiracy to commit money laundering.
Prosecutors allege that Kwon, 33, orchestrated a series of scams that led to an estimated $40 billion in losses through 2022 and destabilized the broader cryptocurrency market.
At the hearing, Kwon appeared in court wearing an olive green shirt and black sweatpants. His attorney, Andrew Chesley, entered a not guilty plea on Kwon's behalf. U.S. Magistrate Judge Robert Lehrburger ruled that Kwon remain in custody because Chesley did not seek bail.
Kwon is expected to return to court on Jan. 8, 2025. He left the courtroom with a copy of the 79-page indictment in hand.
The indictment accuses Kwon of misleading investors about the stability of TerraUSD, a stablecoin pegged to the US dollar.
Prosecutors allege that in May 2021, Kwon falsely stated that a computer algorithm, the “Terra Protocol,” restored TerraUSD’s $1 peg after it fell below the threshold.
In reality, Kwon allegedly arranged for a high-frequency trading firm to purchase millions of dollars worth of TerraUSD, artificially inflating its price.
Prosecutors say the scam led to significant investment in Terraform Labs products and boosted the value of Luna, TerraUSD’s companion token, to $50 billion by early 2022.
“Much of this growth occurred following Kwon’s brazen deceptions about Terraform and its technology,” the indictment states.
When TerraUSD began to lose value again in May 2022, attempts to stabilize it failed, leading to a crash that wiped out TerraUSD, Luna, and billions of other cryptocurrency assets.
*This is not investment advice.
