Do Kwon, co-founder and former CEO of Terraform Labs, appeared in Manhattan federal court on Thursday and denied fraud charges. This hearing took place following his extradition in March 2023 from Montenegro, where he was being held for traveling with a false passport.
Details of the Accusations
U.S. federal prosecutors have charged Do Kwon with securities fraud, wire fraud, commodity fraud, conspiracy and a new money laundering charge. The complaints state that Kwon is accused of misleading investors about the stability of TerraUSD.
Prosecutors allege that Kwon falsely stated in May 2021 that he was keeping the algorithmic coin “Terra Protocol” stable. However, Kwon secretly agreed with a trading firm to make its price artificially sustainable and spent a large amount of TerraUSD on this job.
Do Kwon had also previously launched an algorithmic stablecoin, which also failed. However, since he did so anonymously, his previous failure went unnoticed. Thus, Terra turned into a 40 billion dollar ecosystem.
Terra Case
The updated indictment states that this growth occurred after Kwon made bold lies about Terraform and its technology. These claims attracted both individual and institutional investors, pushing the value of Terraform products, including the Luna token, up to $50 billion by early 2022, prosecutors said.
“Much of this growth resulted from Kwon’s deceptions about Terraform and its technology.” -Indictment.
Do Kwon, 33, appeared before Deputy U.S. Judge Robert Lehrburger on Thursday. Kwon denied all accusations and maintained that Terraform Labs was honest about its operations.
Terraform Labs founder Do Kwon’s denial of the accusations is considered an important development in terms of fluctuations in cryptocurrency markets and regulatory approaches.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
