Do Kwon Pleads Not Guilty in U.S. Court Over Terra Ecosystem Collapse

Do Kwon, the co-founder of Terraform Labs, appeared in U.S. court on January 2 and pleaded not guilty to fraud charges related to the $40 billion collapse of the TerraUSD stablecoin, according to Bloomberg News.
Kwon faced Judge Robert Lehrburger at the U.S. District Court in Manhattan and agreed to remain in custody without bail. He faces nine charges, including wire fraud, securities, and commodities fraud, stemming from his alleged role in the collapse of Terraform Labs after the value of the company’s LUNA and UST tokens plummeted.
After being arrested in Montenegro in March 2023 while attempting to travel with a fake passport, Kwon remained in the country amid a standoff between the U.S. and South Korean governments over where he would face charges. Both nations accuse Kwon of fraud, with South Korea seeking his extradition due to his citizenship.
Meanwhile, Kwon appealed to avoid extradition to the U.S., as the penalties for financial crimes in South Korea are generally less severe.
On December 26, Montenegro's Constitutional Court rejected his appeal, and a few days later, the country’s Justice Minister signed an order for Kwon’s extradition.
On December 31, police in Montenegro handed Kwon over to U.S. authorities at Podgorica International Airport.
Awaiting Trial
Prosecutors in New York allege that Kwon misled investors about the capabilities and adoption rate of the Terra blockchain, arguing that his actions directly contributed to the catastrophic collapse of the platform.
The U.S. Attorney’s Office in Manhattan, which successfully prosecuted FTX co-founder Sam Bankman-Fried last year, is currently handling the case against Kwon.
Additionally, Kwon has faced legal consequences. A U.S. jury ruled that he and Terraform Labs were responsible in a civil fraud lawsuit filed by the Securities and Exchange Commission, leading to a $4.47 billion settlement. Terraform Labs later filed for bankruptcy.
Kwon’s lawyer declined to comment after the hearing. A follow-up court hearing is scheduled for January 8, paving the way for what could be a high-profile cryptocurrency trial in the Southern District of New York.
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