Terraform Labs Co-Founder Do Kwon Pleads Not Guilty
Terraform Labs co-founder Do Kwon, 33, appeared before a US magistrate on 2 January 2025, pleading not guilty to charges linked to the $40 billion collapse of TerraUSD, a stablecoin developed by his Singapore-based company.
During the hearing before Judge Robert Lehrburger of the Southern District of New York, Kwon agreed to remain in custody without bail.
The charges include securities fraud, wire fraud, money laundering, and commodities fraud, stemming from his role in the Terra ecosystem's downfall.
The hearing marks a pivotal moment in Kwon's legal journey, which has captured global attention since his extradition from Montenegro, where courts debated sending him to the US or South Korea.
Prosecutors from the Manhattan US Attorney's Office have not indicated whether a plea deal is on the table or if they intend to proceed with a criminal trial.
A case conference is scheduled for 8 January 2025, allowing both sides to exchange evidence and discuss pre-trial motions.
BREAKING: 🇺🇸 Do Kwon pleads not guilty to US fraud charges over $40 billion Terra collapse.
The next court conference is set for Jan. 8 for the defense and the prosecution to discuss motions and evidence leading into the trial. pic.twitter.com/Dct0RaB2Az
— udyhighs.ton 💎🧠 (@UdyHighs) January 2, 2025
As the legal battle unfolds, Kwon remains at the center of one of the most high-profile cryptocurrency fraud cases to date.
Do Kwon Extradited to the US Following Lengthy Extradition Battle,
Montenegro's legal authorities had determined Kwon was eligible for extradition to either the US or South Korea to face trial.
However, on 27 December, Justice Minister Bojan Božović formally approved his extradition to the US.
"Crypto Mogul Do Kwon to Be Extradited to US, Montenegro Says"
"...Kwon, who faces prosecutions in both New York and Seoul over the $40 billion collapse of the TerraUSD stablecoin in 2022, was arrested in Montenegro last year for traveling on a foreign passport....
Kwon’s… https://t.co/h6LYorkTj1 pic.twitter.com/obY9ZH3aDZ
— kristen shaughnessy (@kshaughnessy2) December 28, 2024
The transfer took place earlier this week following Kwon's detention in Montenegro for traveling with a fake passport.
He was arrested at Podgorica Airport in March 2023 while attempting to board a private jet to Dubai.
Although Montenegro's courts initially favoured South Korea's extradition request, the US secured his transfer, leveraging its security partnership with Montenegro.
In a translated statement, Montenegro's Ministry of Justice cited multiple factors in its decision to extradite Kwon to the US:
“The gravity of the criminal acts, the place of execution, the order of submission of the request, the citizenship of the requested person, the possibility of further extradition to another country, as well as other circumstances.”
On 31 December, Prime Minister Milojko Spajić confirmed Kwon was in US custody after being handed over to American authorities.
Today Montenegro completed the extradition of Do Kwon to the United States to face charges in the Terra/Luna case.
Our nation WELCOMES INNOVATION and legitimate crypto, AI and other tech entrepreneurs - but we have ZERO TOLERANCE FOR FRAUD. This extradition demonstrates our…
— Milojko Spajić (@MickeySpajic) December 31, 2024
This development follows Terraform Labs' settlement with the US Securities and Exchange Commission in June 2024.
The company agreed to pay $4.47 billion, including $204 million in penalties tied to Kwon's actions as its executive, further solidifying the gravity of the allegations against him.
Do Kwon Wanted by US & South Korea
Kwon faces serious charges from the US Justice Department, including financial fraud and the use of falsified passports in an attempt to evade arrest.
These offenses carry significant prison time.
US prosecutors allege that Kwon orchestrated a "financial world" built on deception, employing manipulative tactics to mislead investors, users, business partners, and regulators, according to a filing released Thursday.
The prosecutors said:
"Behind the scenes, core Terraform products did not work as Kwon advertised, and were manipulated to create the illusion of a functioning and decentralised financial system in order to lure investors."
Meanwhile, Kwon's legal troubles extend to his native South Korea, where authorities have also sought to prosecute him, with a potential sentence of 40 years if convicted.
Do Kwon Faces Nine Charges
Kwon, now faces nine criminal charges following his extradition from Montenegro.
The latest addition—a conspiracy to commit money laundering charge—was unveiled in a superseding indictment unsealed on 2 January by the US District Court for the Southern District of New York.
US Attorney Damian Williams alleges Kwon knowingly facilitated transactions exceeding $10,000, aware they represented proceeds from unlawful activities.
These charges accompany eight counts already filed in March 2023, including securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering, all linked to Terraform Labs' collapse following the crash of its tokens, LUNA and UST.
Prosecutors initially filed the superseding indictment under seal in May 2024, with its disclosure aligning with Kwon’s recent court appearance.
Defiant and Unrepentant or There's More to it than Meets the Eye?
Kwon entered the courtroom wearing a gray-green sweater, his demeanour notably calm, even punctuated by a smile.
Di Kwon has just been brought in by US Marshals, wearing grey / green sweater. Now retained lawyers on both sides of him
— Inner City Press (@innercitypress) January 2, 2025
This composure stands in stark contrast to the gravity of his situation.
A local reporter in the courtroom stated:
“Do Kwon is chatting with one of his lawyers, smiling- apparently in good spirits. In Montenegro on December 31 at 10 AM local, FBI took [him into] custody. Kwon plead not guilty through legal counsel, who added: 'We consent to detention without prejudice.'”
Do Kwon is chatting with one of his lawyers, smiling - apparently in good spirits
— Inner City Press (@innercitypress) January 2, 2025
Once riding high on the success of LUNA, Kwon amassed vast wealth rapidly and controversially mocked those less fortunate on X (formerly known as Twitter).
I don’t debate the poor on Twitter, and sorry I don’t have any change on me for her at the moment.
— Do Kwon 🌕 (@stablekwon) July 1, 2021
His relaxed courtroom presence invites speculation: is it a display of unshakable confidence, or does it reflect an unrepentant attitude amidst the fallout of his actions?
