Do Kwon made his first appearance in a US court yesterday (2), facing federal fraud charges. Kwon pleaded “not guilty”, local reporters said.
The US Department of Justice is seeking prison for his crimes, and his home country also wants to see him behind bars.
Do Kwon finally faces court
Do Kwon, the founder of Terraform Labs, has been embroiled in this extradition battle for quite some time. A high court in Montenegro approved Kwon’s initial extradition in February 2024, but he has subsequently gone through several appeals.
However, the battle finally ended on December 27, and US authorities arrested him on New Year's Eve. Yesterday (2), he appeared in court.
Do Kwon is talking to one of his lawyers, smiling – apparently in good spirits. In Montenegro, on December 31 at 10 am local time, the FBI arrested him. Kwon pleaded not guilty through his lawyer, who added: ‘We agree to the detention without prejudice,’ a local reporter at the courthouse said.
This protracted legal battle revolves around the collapse of TerraUSD, when one of Terraform’s stablecoins dramatically shook the market. Kwon reached an undisclosed settlement with the SEC in May, but it only involved one set of charges. The commission wanted Kwon charged with misleading his investors, which warranted penalties including fines and bans.
However, Do Kwon is wanted by the U.S. Department of Justice for financial fraud and using fake passports to unsuccessfully evade arrest. These charges carry prison time.
Additionally, Kwon's home country of South Korea has also attempted to prosecute him, and he faces 40 years if convicted in that jurisdiction.
Given the extreme seriousness of these events, his apparent calm is quite remarkable. However, today’s court appearance is only the beginning of a long process of indictment and trial. Do Kwon fought hard to avoid extradition to the US, even funding the Montenegrin opposition party to improve his chances of remaining in the country.
In short, even if he seeks a plea deal similar to the one he made with the SEC, it currently seems quite likely that Do Kwon will face prison time. Despite the growing pro-crypto sentiment in the US government, prosecutors are still eager to sentence major fraudsters like Sam Bankman-Fried. A high-profile case like Kwon’s will also attract attention.
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