U.S. Prosecutors File Fraud Charges Against Do Kwon
- Do Kwon was charged with conspiracy to defraud, commodities fraud, securities fraud, wire fraud, and conspiracy to engage in market manipulation.
- A spokesperson for the Manhattan U.S. attorney’s office, which brought the charges against Do Kwon, said the Department of Justice (DoJ) will seek his extradition.
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U.S. federal prosecutors in New York charged Terraform Labs CEO Do Kwon with fraud only hours after he was arrested in Montenegro’s capital city of Podgorica, court documents filed on 23 March show.
According to the complaint, the South Korean national has been charged with eight counts of fraud, including conspiracy to defraud, commodities fraud, securities fraud, wire fraud, and conspiracy to engage in market manipulation. A spokesperson for the Manhattan U.S. attorney’s office — which brought the charges against Do Kwon — said that the Department of Justice (DoJ) will seek the extradition of the executive to the U.S..
In the filing, U.S. prosecutors claimed to have jurisdiction over Do Kwo due to a series of false and misleading statements — regarding the adoption rate of the Terra blockchain — he made during a TV interiew that was broadcasted to the Southern District of New York. The prosecutors also pointed to other TV appearances and tweets, where Do Kwon purportedly made misleading statements regarding the ability of Terra USD (UST) stablecoin to keep its peg to the U.S. dollar.
The complaint also claims that Do Kwon “contacted representatives of a United States trading and investment firm” in May 2021 to help him in altering the market price of UST so it retains its peg to the U.S. dollar. This claim is consistent to the one made by the U.S. Securities and Exchange Commission back in February, when the regulator filed a lawsuit against Terraform Labs and Do Kwon for “orchestrating a multi-billion dollar crypto securities fraud”
An individual suspected to be Do Kwon was detained at the Podgorica airport in Montenegro with “falsified documents” on Thursday. The South Korean National Police Agency later confirmed his identity using fingerprint information.
- A district court in South Korea ruled that the token was not a security, noting that it was “difficult to see LUNA as financial investment product regulated by the Capital Markets Act”.
- Using this decision, the court dismissed the prosecution’s request to confiscate properties owned by Terraform Labs’ co-founder Hyun-seung Shin.
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- The now arrested Terraform Labs CEO had reportedly converted the majority of his illicit funds into BTC using foreign exchanged not under the jurisdiction of South Korea.
- While none of the assets tied to Do Kwon were recoverable, South Korean authorities continue to seize assets and properties tied to other executives of Terra.
- A person suspected to be Terra founder Do Kwon was arrested at the airport in Montenegro’s capital city of Podgorica with “falsified documents”.
- South Korean authorities have confirmed the individual was Do Kwon based on “photo data”, name, age, and nationality, but are still waiting for fingerprint information.