Key Street Shops
- Do Kwon pleaded not guilty to US fraud charges related to the collapse of TerraUSD and Luna.
- Kwon is accused of misleading investors about TerraUSD’s stability and functionality.
Do Kwon pleaded not guilty to multiple fraud charges in Manhattan federal court after he was extradited from Montenegro to face criminal charges related to the $40 billion collapse of digital assets TerraUSD and Luna in 2022.
(Do Kwon is sifting through the indictment that replaced him – then turns to his second lawyer)
Judge: How do you plead?
Innocent (through Chesley’s counsel says, We consent to hold harmless— Inner City Press (@innercitypress) January 2, 2025
Kwon, who co-founded Terraform Labs, faces charges including securities fraud, wire fraud, commodities fraud, and conspiracy to defraud and engage in market manipulation.
Prosecutors allege he misled investors about the stability and functionality of TerraUSD, a stable of coins designed to maintain a $1 peg, and its companion Luna token.
His defense team argued that the drop in signals resulted from market dynamics rather than fraudulent activity, stressing that Kwon was transparent about investment risks.
The SEC and federal prosecutors in New York alleged that Kwon misled investors by claiming that TerraUSD could “self-heal” or automatically maintain its pegs through algorithmic methods, when it required significant outside intervention, including confidential agreements with high-frequency trading firms to support it. price.
Prosecutors pointed to instances where Kwon’s public statements allegedly contradicted Terraform Labs’ operating realities, highlighting the heavy losses suffered by investors.
If convicted on all counts, Kwon could face more than 100 years in prison, although actual sentences typically fall below the maximum penalties. His next court date has not been set.
In April 2024, a jury in New York found Terraform Labs and Do Kwon guilty of fraud in a case initiated by the SEC, which involved misrepresenting the stability of TerraUSD.
Last month, Terraform Labs and Do Kwon reached a default settlement with the SEC regarding civil fraud charges stemming from the collapse of TerraUSD, including financial penalties and operational restrictions for Kwon.
In May 2024, lawyers for Terraform Labs argued against the SEC’s charges, claiming that the majority of their token sales were outside the United States and that the evidence does not support the alleged financial losses.
