Jury Finds Terraform Labs and Do Kwon Liable for Civil Fraud

A New York jury has found crypto mogul Do Kwon and his company, Terraform Labs, liable on civil fraud charges related to the collapse of TerraUSD stablecoin in 2022. The jury's verdict comes amid ongoing uncertainty over Kwon's potential extradition from Montenegro to either the US or South Korea, both of which seek his extradition in connection with the crypto crash.

Terraform Labs and Do Kwon Found Liable in Civil Fraud Lawsuit

A jury in the United States District Court for the Southern District of New York has ruled that crypto mogul Do Kwon and his company, Terraform Labs, are liable on charges of civil fraud. The verdict comes amidst ongoing legal proceedings to determine whether Kwon will be extradited to South Korea or the United States.

The lawsuit, filed by the U.S. Securities and Exchange Commission (SEC), alleges that Kwon and Terraform Labs misled investors about the stability of TerraUSD (UST), a stablecoin pegged to the U.S. dollar, prior to its collapse in May 2022. The jury agreed with the SEC's claims, finding that Kwon and his company engaged in deceptive practices that induced investors to purchase UST.

The collapse of UST caused a significant financial loss for investors, with the total market value of Terraform Labs' cryptocurrencies plummeting by an estimated $37 billion. South Korean authorities have also charged Kwon with financial fraud and have sought his extradition from Montenegro, where he is currently residing.

The extradition process has faced legal challenges, with the Supreme Court of Montenegro initially ordering Kwon's surrender to South Korea. However, the decision was subsequently overturned, and the case was remanded to a lower court for further review.

Kwon's whereabouts became known in March 2023 when he was apprehended at an airport in Montenegro attempting to board a flight using a forged passport. He had previously fled South Korea to avoid arrest in connection with the TerraUSD crash.

The verdict by the New York jury adds to the legal pressure facing Kwon. It remains uncertain whether he will be extradited to South Korea or the United States, but the ruling sends a clear message that misleading investors about the risks associated with cryptocurrencies will not be tolerated.

The case highlights the need for robust regulation in the cryptocurrency market to protect investors and prevent future financial crises. The SEC has taken a proactive stance in investigating and enforcing violations of securities laws in the crypto industry, and its efforts have played a significant role in holding individuals and companies accountable for their actions.