Do Kwon Has Been Charged With Fraud By US Prosecutors After Being Arrested In Montenegro

Last year, Kwon, the crypto entrepreneur who created TerraUSD and its free-floating sister affiliate Luna, lost over $40 billion. The collapse of his Singapore-based company Terraform Labs, and the TerraUSD stablecoin, triggered a larger sell-off in the crypto market and caused chaos in the digital asset sector.

After being arrested in Montenegro on Thursday, Do Kwon, the CEO of Terraform Labs and the creator of TerraUSD stablecoin, was charged with fraud by US prosecutors. The US attorney's office in New York has indicted Kwon on eight counts, which include securities fraud, wire fraud, commodities fraud, and conspiracy, as per a Reuters report.

The criminal charges have been brought against Kwon following the US Securities and Exchange Commission's allegations of fraud against him and Terraform Labs last month. Kwon was already wanted by authorities in South Korea, his home country, as he was a fugitive from an arrest warrant.

As per the complaint, Kwon is facing charges of commodities fraud, securities fraud, wire fraud, conspiracy to engage in market manipulation, and conspiracy to defraud.

The legal filing claimed that Kwon made several "untrue and misleading statements of material fact" over a period of several years. These included TV appearances and tweets linked to Terraform Labs. Under one of the charges, the filing alleged that Kwon conspired with others to defraud purchasers of cryptocurrencies issued by TFL by making false statements and engaging in market manipulation, deceiving buyers about the effectiveness of the algorithmic mechanism that was supposed to ensure the stability of UST's price.

The filing also claimed that Kwon reached out to a US trading and investment firm for assistance in manipulating the market price of UST. The company provided this assistance, and the SEC made a similar allegation in its complaint. Later, CoinDesk reported that the firm in question was Jump Crypto.

If Kwon is extradited to New York by US prosecutors, he would be facing prosecution from the same office that is handling the criminal case against Sam Bankman-Fried, co-founder of FTX, who was transferred from the Bahamas to face fraud charges after his crypto business crumbled.