Do Kwon, a South Korean entrepreneur who presided over the $40 billion U.S. collapse of two cryptocurrencies, has pleaded “not guilty” to fraud charges brought against him in America.
Kwon entered his not guilty plea in U.S. court after being extradited from Montenegro.
Federal prosecutors in New York City have charged Kwon with multiple fraud counts related to his previous crypto company Terraform Labs, which developed the TerraUSD stablecoin and Luna cryptocurrency that failed and cost investors billions of dollars in losses.
Kwon has been charged with two counts of securities fraud, as well as wire fraud, commodities fraud, and conspiracy to commit fraud.
Kwon, age 33, agreed in June 2024 to pay an $80 million U.S. civil fine and refrain from future crypto transactions as part of a $4.55 billion U.S. settlement with the U.S. Securities and Exchange Commission (SEC).
The U.S. Attorney’s Office claims that Kwon misled investors about TerraUSD, a crypto stablecoin that was pegged to the value of the U.S. dollar.
Kwon allegedly told investors falsely that a computer algorithm had restored TerraUSD’s value when it decoupled from the greenback in May 2021.
Prosecutors claim that Kwon’s false claims led retail investors to buy Terraform products and boost the value of Luna, a more traditional cryptocurrency that was linked to TerraUSD.
The indictment accuses Kwon of “brazen deceptions about Terraform and its technology.”
The collapse of TerraUSD and Luna dragged down the value of other cryptocurrencies, including Bitcoin (BTC) and caused widespread volatility in the crypto market.
Terraform Labs declared bankruptcy in January 2024.
Bitcoin, the largest cryptocurrency by market capitalization, has since recovered and its price has risen 125% in the past year to trade at $96,600 U.S. per token.
