Topline
Do Kwon, the crypto mogul behind the high yielding stablecoin TerraUSD and its companion token Luna, which collapsed last year and wiped out nearly $40 billion from the cryptocurrency market, was charged with fraud by U.S. prosecutors on Thursday following his arrest in Montenegro.
Do Kwon, co-founder and chief executive officer of Terraform Labs, in the company’s office in Seoul, … [+]
Key Facts
Kwon was charged with conspiracy to commit commodities fraud, securities fraud, wire fraud, conspiracy to defraud investors and engage in market manipulation, according to a filing made with the Southern District of New York federal court.
Kwon, who was allegedly on the run, was arrested in Montenegro on Thursday while attempting to fly to Dubai using forged Costa Rican travel documents.
Citing a spokesperson, CoinDesk reported the Department of Justice will seek Kwon’s extradition to the U.S.
But it’s unclear whether U.S. authorities will be able to secure his extradition as Kwon’s home country, South Korea, has also sought his extradition as he faces charges for violating the country’s capital market law.
Key Background
Kwon is one of the founders of Seoul-based Terraform Labs, which created Terra blockchain protocol along with high yielding stablecoin TerraUSD and its companion Luna token. Luna, which was an algorithmic stablecoin—propped by the value of its companion coin—lost its $1 peg in May last year, triggering a downward spiral that eventually left the Terra-Luna pair worthless and wiped out around $40 billion. The collapse of the two tokens snowballed into a wider crypto crash, as Singapore-based crypto hedge fund Three Arrows Capital (3AC) announced it had become insolvent after disclosing it had invested $200 million in the Luna token. Last year, South Korean prosecutors charged Kwon with violating the country’s Capital Markets Act and issued an arrest warrant against him. Since then, Do Kwon’s whereabouts had been unknown, even though he insisted on Twitter that he was not “on the run” from any government agencies and was willing to cooperate with any investigation. Despite this, he refused to disclose his whereabouts, suggesting that it would be an invasion of privacy.
Further Reading
Do Kwon Charged With Fraud by US Prosecutors in New York (Bloomberg)
Source: https://www.forbes.com/sites/siladityaray/2023/03/24/terra-luna-coins-founder-do-kwon-charged-with-fraud-by-us-prosecutors/