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.