Do Kwon Pleads Not Guilty To Fraud Charges After U.S. Extradition

Do Kwon, the founder of the collapsed Terra Luna crypto ecosystem, pleaded not guilty to fraud charges following his extradition to the U.S., Reuters reported.

Kwon faces multiple charges, including securities fraud, wire fraud, commodities fraud, and money laundering conspiracy. Prosecutors allege he misled investors in 2021 about the algorithm underpinning the terraUSD stablecoin, which was designed to maintain a $1 value. TerraUSD’s collapse in 2022 wiped out an estimated $40 billion in value.

Magistrate Judge Robert W. Lehrburger of the Southern District of New York ordered Kwon to remain detained pending a court appearance scheduled for January 8.

Kwon was arrested in Montenegro in March 2023 on passport forgery charges. After over a year of legal battles, he was extradited to the U.S. to face criminal charges.

Kwon appeared in court wearing a “grey/green sweater” and smiling alongside his lawyers, according to Inner City Press.

U.S. prosecutors allege that Kwon used “manipulative and deceptive techniques” to mislead investors, business partners, and regulators, creating what they described as a “financial world built on lies.” The charges include conspiracy to defraud, wire fraud, securities fraud, commodities fraud, and money laundering conspiracy. Prosecutors claim Kwon manipulated Terraform products to give the illusion of a functioning decentralized financial system.

If convicted of all charges, Kwon faces a maximum prison sentence of 130 years, according to the U.S. Department of Justice.

Kwon’s extradition from Montenegro followed months of legal debates over whether he should face trial in South Korea or the U.S. He was arrested in Montenegro in March 2023 on passport forgery charges.

In addition to the criminal case, Kwon also faces civil charges brought by the U.S. Securities and Exchange Commission (SEC). The SEC accused Kwon and Terraform of violating federal securities laws by engaging in fraud connected to the buying and selling of Terraform securities. A jury found Kwon and Terraform liable for civil fraud in April, ruling that they misled investors about the stability and functionality of their products.