The multibillion-dollar collapse of his cryptocurrency startup prompted the South Korean co-founder of Terraform Labs to appear in a New York court on Thursday to face fraud charges.
On Tuesday, 33-year-old Do Hyeong Kwon was extradited from Montenegro to the United States.
Former Terraform CEO Kwon is charged with misleading investors to artificially increase the value of his company’s cryptocurrency holdings.
“Do Hyeong Kwon will now be held accountable in an American courtroom for… his elaborate schemes involving Terraform’s cryptocurrencies, which resulted in over $40 billion in investor losses,” Attorney General Merrick Garland said in a statement.
According to US Attorney Daniel Gitner, the May 2022 cryptocurrency crash of Terraform “erased over $40 billion in investor assets, causing devastating losses to countless investors in the United States and around the world.”
Kwon, who is also wanted in South Korea, is accused of money laundering, securities fraud, commodities fraud, and wire fraud in the United States. If found guilty of all charges, he could spend up to 130 years in jail.
While getting about to board a flight to Dubai in March 2023, the cryptocurrency tycoon was apprehended at an airport in the Montenegrin capital of Podgorica while in possession of a forged Costa Rican passport.
Before his arrest in the tiny Balkan nation, he had been on the run for months, fleeing South Korea and later Singapore.
Montenegro deported Kwon’s business partner — identified only by his initials J.C.H. — to South Korea in early February.
TerraUSD, a cryptocurrency developed by Terraform, was promoted as a “stablecoin,” a token that is based on reliable assets like the US dollar to avoid sharp swings.
Kwon effectively promoted it as the upcoming cryptocurrency sensation, drawing billions of dollars in investments and creating a lot of buzz across the world.
According to South Korean media accounts, he was a “genius.”
However, in May 2022, TerraUSD and its sibling coin Luna entered a death spiral despite billions of dollars in investments.
Many investors lost their whole life assets in Kwon’s glorified pyramid scheme, according to experts.
Prior to the crash, he fled South Korea and was on the run.
Cryptocurrencies have come under increasing scrutiny from regulators after a string of controversies in recent years, including the high-profile collapses of exchanges.
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