Do Kwon, the South Korean entrepreneur behind the failed cryptocurrencies TerraUSD and Luna, is scheduled to appear in federal court in Manhattan on Thursday on serious criminal fraud charges.
This follows a recent extradition from Montenegro, where he was detained for more than a year for attempting to use fake travel documents at the country’s Podgorica airport.
Do Kwon faces criminal charges in the US
Kwon’s legal troubles stem from the catastrophic collapse of his digital currency in 2022, which resulted in investors losing an estimated $40 billion.
The SEC and Manhattan U.S. Attorney’s Office allege that Kwon misled investors about the stability of TerraUSD, a stablecoin that purports to maintain the value of $1. The failure of TerraUSD and its sister token Luna caused a widespread downturn in the crypto market, impacting established digital assets such as Bitcoin (BTC).
Federal prosecutors in Manhattan indicted him on multiple charges, including securities fraud, wire fraud, commodity fraud and conspiracy. However, Do Kwon has consistently denied any wrongdoing and maintains that he acted transparently regarding the operation of his company’s products.
In a significant development last June, Kwon paid an $80 million civil penalty to the U.S. Securities and Exchange Commission (SEC) as part of a $4.55 billion settlement related to his company Terraform Labs. Agreed.
As part of the settlement, Do Kwon also accepted a ban on future cryptocurrency transactions. Nevertheless, Kwon’s legal challenges are far from over. This is because they face the possibility of criminal penalties in the US judicial system.
In a civil trial in April, a federal jury found Kwon and Terraform Labs liable for defrauding investors. In closing arguments, Terraform’s legal team argued that Kwon was honest about his product, even if it failed. However, Mr. Dogwon was absent from the trial because he was detained in Montenegro.
An important test for virtual currency regulation?
As reported by Bitcoinist, Montenegro’s Justice Minister Bojan Bojovic signed Kwon’s extradition order last week, rejecting South Korea’s request for extradition. The decision came after more than a year of legal battles that included extradition requests from both the United States and South Korea.
Do Kwon joins a growing list of crypto executives facing legal repercussions following the 2022 market downturn.
Notable names include Sam Bankman Fried, the founder of the failed FTX exchange who is currently appealing a 25-year prison sentence for defrauding customers, and Celsius Networks, who recently pleaded guilty to fraud charges. and former CEO Alex Mashinsky.
Kwon is preparing to appear in court, the outcome of which could have significant implications for the future of cryptocurrency regulation and investor protection.
This legal drama is poised to garner considerable attention, not only because of Kwon’s high profile, but also because his case could have far-reaching implications for the rapidly advancing digital currency landscape. .
The daily chart shows that the price of LUNC is rebounding upwards. Source: LUNCUSDT on Tradingview.com
At the time of writing, Terra’s Luna Classic (LUNC) token is trading at $0.0001148, up 1.2% in the 24-hour time frame.
Featured image from DALL-E, chart from TradingView.com
