Terra Founder Do Kwon Denies Fraud Charges After Extradition
Kwon Denies Fraud Charges in U.S. Court
Do Kwon, co-founder of Terraform Labs, pleaded not guilty in a New York court on Thursday to criminal charges related to the infamous 2022 collapse of the Terra ecosystem. His plea followed his extradition from Montenegro earlier this week.
https://x.com/innercitypress/status/1874875706297192850
Kwon faces nine criminal counts, including securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering. During the hearing, he agreed to be held without bail, as reported by Inner City Press.
From Crypto Star to Alleged Scammer
Once hailed as a tech visionary, Kwon founded Terra, a crypto ecosystem that revolved around the LUNA token and its algorithmic stablecoin, TerraUSD (UST). By early 2022, Terra had grown into the second-largest blockchain after Ethereum, attracting significant investor interest.
At its peak, LUNA was among the top cryptocurrencies by market cap, and Kwon became notorious for mocking critics and “poor” people on social media. However, the empire crumbled in May 2022, when UST lost its peg to the U.S. dollar, triggering a collapse that wiped out $40 billion in investor funds.
Authorities Allege Fraud and Manipulation
The U.S. and South Korean governments accuse Kwon of deceiving investors by falsely promoting Terra’s products as decentralized and reliable financial tools. According to the indictment, Terraform Labs allegedly manipulated its core products to “create the illusion of a functioning system” and lure in unsuspecting investors.
Arrest and Extradition
Kwon was apprehended in Montenegro last year for attempting to travel with a fake passport. He remained in custody until this week, when he was extradited to the U.S. to face trial. The Terra crash’s ripple effects devastated the crypto market, leading to bankruptcies among projects tied to Terra.
Kwon’s legal battle is set to become one of the most closely watched cases in crypto history, as authorities seek accountability for what they describe as one of the largest financial frauds in recent memory.
