Federal prosecutors in Manhattan, New York (USA) on January 2 announced the indictment of Do Kwon, a Korean cryptocurrency kingpin. According to Reuters, Kwon (33 years old) is wanted on fraud charges, was arrested in March 2023 in Montenegro and has just been extradited to the US.
Do Kwon in Montenegro in March 2024
Kwon and the cryptocurrency exchange Terraform Labs he co-founded (headquartered in Singapore) were sued by the US Securities and Exchange Commission (SEC) in February 2023 regarding the digital currencies TerraUSD and Luna. The agency believes that the collapse in prices of these currencies caused about $40 billion in losses to the digital currency market.
The SEC said that Terraform Labs and Mr. Kwon misled investors about the stability of TerraUSD. TerraUSD is designed to maintain price stability with the USD at the exchange rate of 1 TerraUSD equaling 1 USD. In May 2021, the TerraUSD market price fell sharply, but Kwon hired a trading company to secretly buy millions of this currency to inflate the price and defraud investors, Reuters reported citing the indictment.
This currency collapsed in May 2022, causing the cryptocurrency market to stagger, one of the biggest disasters in digital currency history, affecting many other currencies, including Bitcoin.
According to the indictment, Do Kwon was indicted on nine charges such as fraud and money laundering conspiracy. The defendant pleaded not guilty. Kwon’s defense attorney did not apply for bail, so the judge ordered the defendant detained. Kwon carried a copy of the 79-page indictment when he was escorted from the court by security forces. He is expected to appear in court again on January 8.
In June, Kwon agreed to pay an $80 million fine and was banned from trading digital currencies under an agreement with the SEC. According to Yonhap news agency, Do Kwon could receive a sentence of 130 years in prison if convicted of all charges.
