Do Kwon Set to Face Criminal Fraud Charges in US Court After Extradition from Montenegro

Do Kwon, co-founder of Terraform Labs, the incubator of TerraUSD USTC/USD and Luna LUNC/USD, is set to face criminal fraud charges in a U.S. court following his extradition from Montenegro.

Terraform Labs co-founder Do Kwon is set to face criminal fraud charges in a U.S. court following his extradition from Montenegro.

Kwon is expected to appear before U.S. Magistrate Judge Robert Lehrburger in a Manhattan federal court on Thursday afternoon, according to the South China Morning Post.

The U.S. extradition request was filed in June 2023, following Kwon’s arrest in April. The U.S. прокуратура alleges that Kwon and others engaged in a "fraudulent scheme" to sell unregistered securities and commodities, resulting in an estimated $40 billion loss.

Kwon has denied any wrongdoing related to the charges. He is facing multiple counts of commodities fraud, conspiracy, securities fraud and wire fraud.

The extradition marks the end of a competing legal battle between the U.S. and South Korea, both of which had filed extradition requests for Kwon.

Montenegro Minister of Justice Bojan Božović ultimately authorized Kwon’s transfer to the U.S., citing factors such as the gravity of the alleged offenses and the sequence of extradition requests.

In June 2024, Kwon agreed to pay an $80 million civil fine and was banned from cryptocurrency transactions as part of a $4.55 billion settlement with the U.S. Securities and Exchange Commission (SEC).

The SEC alleged that Kwon and Terraform Labs misled investors about the stability of the TerraUSD token, which was designed to be pegged to the U.S. dollar.

The token lost its peg and collapsed in May 2022, along with the Luna token, wiping out billions of dollars in investor funds.

The case has drawn significant attention in the crypto world, with the TerraUSD token experiencing a 4% surge following news of Kwon’s extradition.

Kwon’s legal troubles follow other high-profile convictions and guilty pleas in the crypto industry this year.

Notably, FTX founder Sam Bankman-Fried was convicted and sentenced for multiple fraud charges, while Celsius Network founder Alex Mashinsky pleaded guilty to fraud charges related to the collapse of the crypto lending platform.