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South Korean crypto mogul Do Hyeong Kwon has entered a not-guilty plea to U.S. criminal fraud charges following his extradition from Montenegro this week. The Terraform Labs co-founder faced a freshly unsealed indictment just in time for his first court appearance in the U.S., tied to the massive multibillion-dollar collapse of his Singapore-based company.
Luna stablecoin co-founder Do Kwon faces more charges
The updated indictment, revealed on Thursday (Jan. 2) in the U.S. District Court for the Southern District of New York, includes allegations from U.S. Attorney Damian Williams that Kwon worked with others in a conspiracy to commit money laundering. The unsealed document also alleges that Kwon developed the TerraUSD and Luna currencies, with securities fraud, wire fraud, and commodities fraud. The firm settled with the U.S. Securities and Exchange Commission for $4.47 billion over the collapse of TerraUSD and Terra tokens in June.
Do Kwon extradited to the United States from Montenegro to face charges relating to fraud resulting in $40 billion in losseshttps://t.co/WzPqUT3AaJ
— US Attorney SDNY (@SDNYnews) January 2, 2025
The U.S. Attorney claims that Kwon was involved in facilitating transactions of over $10,000 on the platform from 2018 to 2022, “knowing that the property involved in certain financial transactions represented the proceeds of some form of unlawful activity.”
He alleged that Kwon’s “constructed financial world was built on lies and manipulative and deceptive techniques,” adding that “Terraform products did not work as Kwon advertised, and were manipulated to create the illusion of a functioning and decentralized financial system in order to lure investors.”
The money laundering charge wasn’t part of the original eight-count indictment filed against Do Kwon back in March 2023. Instead, prosecutors brought it up in a superseding indictment filed under seal in May 2024. The charge became public on January 2, just as Kwon made his U.S. court appearance.
What happened to the Terraform Labs CEO?
Kwon, who is accused of playing a key role in the 2022 collapse of the Terra ecosystem, had been arrested in Montenegro in 2023 for allegedly using fake travel documents. Both the U.S. and South Korea submitted competing extradition requests for the Terraform Labs co-founder. However, Montenegrin authorities only resolved the matter in December 2024, ultimately handing Kwon over to U.S. officials.
Do Kwon, the co-founder of Terraform Labs, appeared in court on January 2, pleading not guilty to all charges and agreeing to remain in detention. It’s still unclear whether U.S. authorities are open to a plea deal or plan to proceed with a full criminal trial. Attorney-General Merrick Garland said in a statement that the collapse of the stablecoin resulted in losses of $40 billion.
Kwon’s situation draws comparisons to the case of former FTX CEO Sam Bankman-Fried. Like Kwon, Bankman-Fried was extradited to the U.S. from another country. In his case, it was the Bahamas. The former FTX chief’s legal team successfully argued to drop a campaign finance charge added later to his indictment, claiming it wasn’t part of the original extradition request.
ReadWrite reported that Bankman-Fried was eventually convicted on seven felony counts and sentenced to 25 years in prison, though he has since filed an appeal.
Featured image: Canva
