The infamous co-founder of Terraform Labs, Do Kwon, has unsurprisingly pleaded not guilty to nine U.S. fraud charges related to the $40 billion Terra LUNA collapse in 2022, following his extradition from Montenegro.
According to a report from Bloomberg, the charges include conspiracy to commit money laundering, commodities fraud, wire fraud, and securities fraud.
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Do Kwon Pleads Not Guilty
During a January 2nd hearing by U.S. Magistrate Judge Robert Lehrburger, Kwon entered his plea through his lawyer while agreeing to remain in detention. It is unclear whether the case will proceed to a criminal trial or result in a plea agreement.
The Manhattan U.S. Attorney’s Office, which is prosecuting Do Kwon, previously led the case against FTX co-founder Sam Bankman-Fried, who is currently serving a 25-year sentence for his role in the 2022 FTX collapse.
The prosecutor alleges that Kwon misled investors about the stability of the Terra blockchain and its associated products, including TerraUSD and LUNA. He secretly collaborated with a high-frequency trading firm to artificially inflate UST’s price in 2021 and manipulated LUNA’s market value, which reached $50 billion by early 2022, the prosecutor added.
Since March 2023, Do Kwon has faced allegations of financial misconduct, with U.S. authorities accusing him of collaborating with multiple entities to commit money laundering. In April 2024, a federal jury found Kwon and Terraform Labs liable for defrauding cryptocurrency investors.
Subsequently, Terraform Labs settled a civil fraud lawsuit with the U.S. Securities and Exchange Commission (SEC) in June 2024 for $4.47 billion. The company later filed for bankruptcy in Delaware, reporting liabilities between $100 million and $500 million.
A status conference for Kwon’s case is set for January 8, 2025, where prosecutors and defense attorneys will exchange evidence and plan the next steps for a potential trial. The proceedings could have far-reaching implications for cryptocurrency regulation, especially following the conviction of Sam Bankman-Fried, former CEO of FTX
Disclaimer
This article is provided for information only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
