In a hearing in Manhattan today the co-founder of Terraform Labs, Do Kwon, denied allegations related to the collapse of TerraUSD.
Do Kwon, the co-founder The co-founder of Terraform Labs pleaded not guilty to criminal fraud charges in Manhattan federal court on Thursday after being extradited from Montenegro, according to Reuters.
The costs are rising from his post in the collapse of cryptocurrencies TerraUSD and Luna, which wiped out an estimated market value of $ 40 billion in 2022.
Do Kwon 'deceived' investors
Federal prosecutors allege that Kwon fraudulent investors about the stability of TerraUSD, claiming in 2021 that its value was maintained by a proprietary algorithm. Prosecutors say 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, commodities fraud, wire fraud, conspiracy, and money laundering.
The charges come after a tumultuous year for Kwon, who fled when the collapse of the Terra blockchain triggered a wave of bankruptcies, including high profile companies similar to Three Arrows Capital.
Interpol sent out Red Notice for capture, and he was arrested in Montenegro in March 2024 while trying to board a flight with forged passports.
Recently Minister of Justice in Montenegro approved Kwon was extradited to the United States, completing months of legal conflict between the US and South Korea, both of whom wanted to prosecute him. Although Kwon now faces serious legal challenges in the US, South Korean authorities are continuing their investigation, which could result in a 40-year prison sentence if convicted.
Kwon's next court appearance is expected to report further proceedings. Its case remains a central topic in discussions about accounting within the cryptocurrency industry.
