Do Kwon Pleads Not Guilty to US Fraud Charges

Do Kwon, the co-founder and former CEO of defunct blockchain platform Terraform Labs, pleaded not guilty to US fraud charges.

According to a Bloomberg report, the South Korean native entered his plea deal before US Magistrate Judge Robert Lehrburger in Manhattan on Thursday, January 2, 2025. His legal representative agreed that he would be held without bail.

This comes just a few days after Kwon was extradited to the US from Montenegro. He was arrested in Montenegro in March 2023 while attempting to travel to Dubai using falsified documents. He was subsequently sent to four months in prison for document forgery.

Kwon’s US Fraud Charges

Following his arrest in Montenegro, a US federal grand jury charged him on eight counts, including commodities fraud and securities fraud, amongst others.

This charge is related to the collapse of the Terra ecosystem in 2022, following a depeg in the algorithmic stablecoin TerraUSD (UST) from the US dollar. After losing parity, its sister token, Luna, also crashed.

UST’s depeg led to a $40 billion wipeout in the crypto sector, causing devastating losses for investors and contagion to industry firms.

US prosecutors alleged that Kwon deceived investors about the stability of UST and its adoption by users.

Terra Reaches $4.47B Settlement With SEC

In early 2023, the US Securities and Exchange Commission (SEC) filed securities fraud charges against Terra and Kwon. Similarly, the commission said Terra and Kwon deceived investors about UST’s stability. The company and its co-founder later reached $4.47 billion with the agency.

Kwon, which owns 92% of Terra, will pay $110 million in disgorgement and $14.32 million in prejudgment interest.

Late last year, Terra reached the final steps of its Chapter 11 bankruptcy after securing court approval to wind down operations. The new manager will try to recover what is left of the company to repay customers.