Terraform Labs co-founder and former CEO Do Kwon has pleaded not guilty to multiple fraud charges in a Manhattan federal court on Thursday. This appearance follows his extradition from Montenegro, where he had been detained since March 2023 for traveling on a fake passport.
The charges are linked to the $40 billion collapse of the TerraUSD and Luna cryptocurrencies, which disrupted global cryptocurrency markets in 2022.
Terraform Labs Founder Do Kwon Pleads Not Guilty
Federal prosecutors in Manhattan charged Terraform Labs co-founder Do Kwon with securities fraud, wire fraud, commodities fraud, conspiracy, and a new count of money laundering conspiracy. The charges allege that Kwon misled investors about the stability of TerraUSD, a stablecoin designed to maintain a $1 value.
Prosecutors claim Kwon falsely stated that an algorithm, the “Terra Protocol,” stabilized the coin in May 2021, while he secretly arranged for a trading firm to purchase large quantities of TerraUSD to artificially sustain its price.
“Much of this growth followed Kwon’s brazen deceptions about Terraform and its technology,” stated the updated indictment. The prosecutor’s office alleges that these claims attracted both retail and institutional investors, pushing the value of Terraform products, including the Luna token, to $50 billion by early 2022.
Terraform Labs co-founder Do Kwon, 33, appeared before U.S. Magistrate Judge Robert Lehrburger on Thursday. He denied all wrongdoing and maintained his stance that Terraform Labs had been truthful about its operations.
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