Do Kwon, a South Korean cryptocurrency entrepreneur and co-founder of Terraform Labs, has pleaded not guilty in a Manhattan courtroom to charges of financial fraud after he was extradited from Montenegro to the U.S. The move is the latest in a series of high-profile coin crashes that have cost the crypto industry an estimated $40 billion by 2022.
Kwon is accused of violating securities laws, wire fraud, commodities fraud and conspiracy to commit money laundering, according to Reuters. The charges relate to Kwon allegedly misleading investors about TerraUSD, a stablecoin developed by Terraform Labs that aims to keep its value stable at $1.
The investigation found that Kwon falsely claimed that their algorithm could maintain the value of TerraUSD after its price crash in May 2021. In fact, he arranged for a high-frequency trading firm to secretly buy millions of dollars of TerraUSD, artificially maintaining the value of the coin.
This deception drove both institutional and individual investors to pour money into Terraform's products and pushed the value of Luna, another token developed by Kwon, to $50 billion by spring 2022. However, both TerraUSD and Luna collapsed rapidly in May 2022, causing a sharp decline in the prices of many other altcoins, including Bitcoin, and causing widespread chaos in the crypto market.
Against that backdrop, Kwon becomes one of several prominent crypto figures to face federal charges following the sharp decline in altcoin prices in 2022. A host of other crypto leaders have also been indicted, including Sam Bankman-Fried from the FTX exchange and Alex Mashinsky, former CEO of Celsius Network.
With these developments, the global cryptocurrency community is closely following the legal battle surrounding Do Kwon, especially as the impact of the case extends to other parts of the coin ecosystem.
Source: Reuters
