Do Kwon, the South Korean co-founder of the bankrupt Terraform Labs, made his first U.S. court appearance after being extradited from Montenegro to face criminal charges.
A newly unsealed indictment adds a charge of money laundering to eight existing charges, including securities, commodities, and wire fraud, linked to the collapse of Terraform Labs in 2022. Kwon, 33, is accused of misleading investors, regulators, and business partners about Terraform’s crypto products. The indictment alleges Kwon manipulated financial systems and conducted fraudulent crypto transfers exceeding $10,000. If convicted on all charges, he faces a maximum sentence of 130 years in prison.
Kwon was extradited on Tuesday, Dec. 26, 2024, and appeared in a Manhattan court on Thursday, Dec. 28. His next court date is set for Jan. 8, 2025.
The case is being heard in a Manhattan federal court. Kwon was arrested in Montenegro in 2023 while attempting to travel to the UAE using a forged passport. Both the U.S. and South Korea had requested his extradition.
The collapse of Terraform Labs in 2022 triggered a $40 billion crash in the crypto market, wiping out TerraUSD and Luna tokens. U.S. Attorney General Merrick Garland stated that Kwon will be held accountable for alleged schemes that caused significant investor losses. TerraUSD was one of the largest stablecoins, pegged to the U.S. dollar, before its sudden collapse.
U.S. prosecutors allege that Kwon orchestrated a deceptive financial system and made false disclosures to create the illusion of a functioning decentralized platform. His arrest followed an international manhunt after South Korea charged him with fraud and capital markets violations. Kwon pleaded not guilty during his court appearance and has denied wrongdoing.
The Terraform Labs collapse marked the beginning of a challenging period for cryptocurrencies, leading to major industry scandals, including the downfall of FTX and Sam Bankman-Fried’s fraud conviction. In a separate civil case, the SEC secured a $4.5 billion penalty against Kwon and Terraform Labs, which filed for bankruptcy earlier this year.
