After allegedly squandering $40 billion in investor funds, Terraform Labs Do Kwon is back in the United States and faces serious fraud accusations.#NewYorkNY #NewYork #Crime #NewYork
New York, New YorkThe extradition of Do Kwon, a co-founder of Terraform Labs, to the United States is a significant development in the bitcoin industry. The U.S. Attorney’s Office for the Southern District of New York has charged the tech entrepreneur in a fraud and money laundering conspiracy that purportedly destroyed $40 billion in investor assets.
Extradition and Arrest Details
On December 31, 2024, Do Kwon, a 33-year-old South Korean national, arrived in the United States following his extradition from Montenegro. He was apprehended in March 2023 while trying to travel with a fake passport, which led to his detention in Europe.
According to authorities, Kwon attempted to enter a nation with which the United States does not have an extradition pact.
A federal grand jury has indicted Do Kwon for deceiving his investors to fraudulently inflate the value of Terraform’s cryptocurrencies and laundering the proceeds of his crimes, according to U.S. Attorney Daniel M. Gitner.
Gitner went on to say that over $40 billion was lost by investors worldwide as a result of the May 2022 meltdown of Terraform’s digital currency.
Alleged Fraud Schemes
Kwon is accused of masterminding several fraudulent schemes to mislead investors about the stability and worth of Terraform’s cryptocurrencies between 2018 until the company’s collapse in 2022. As stated in the indictment:
Manipulation of Stablecoin: Kwon made a false assertion that the TerraUSD stablecoin’s peg to the US dollar was maintained by the Terra Protocol. Following the protocol’s failure in May 2021, he worked with a high-frequency trading company to manipulate the value of TerraUSD.
Mirror Protocol Control: Mirror Protocol was marketed by Kwon as a decentralized stock trading platform. But he allegedly hid the fact that Terraform had covert influence over its activities.
False Claims Regarding Chai: Kwon is charged with deceiving investors by claiming that the Korean payment app Chai was processing billions of transactions on the Terra blockchain. Investigators discovered that established banking networks were being used to conduct Chai’s transactions.
Genesis Stablecoins Misuse: Prosecutors allege Kwon lied about the reserve status of one billion Genesis Stablecoins programmed into the Terra blockchain. Instead, he used $145 million of these coins for market manipulation, including fake Chai transactions and trading bots to influence synthetic asset prices.
Do Kwon, the co-founder and former CEO of Terraform, is accused of defrauding investors by misrepresenting the company’s blockchain products as decentralized, dependable, and effective. He also allegedly engaged in market manipulation, which led to more than $40 billion in investor losses, said FBI Assistant Director James E. Dennehy.
Charges and Possible Sentence
Kwon is charged with several crimes:
If found guilty on all counts, Kwon could spend a maximum of 130 years behind bars.
Attorney General Merrick B. Garland commented, We secured this extradition despite Kwon s alleged attempt to cover his tracks by laundering proceeds of his schemes and trying to use a fraudulent passport to travel to a country that did not have an extradition treaty with the U.S. This extradition from Montenegro is an example of the Justice Department s international partnerships, which enable the pursuit of criminals wherever they attempt to hide.
RELATED TOPICS:Crime|New York|South Korea|Tech
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