The post Do Kwon Pleads Not Guilty in Expanding TerraUSD Fraud Case appeared on BitcoinEthereumNews.com.

South Korean cryptocurrency entrepreneur Do Hyeong Kwon, co-founder of Terraform Labs pleaded not guilty on Thursday to multiple fraud charges in Manhattan federal court. Do Kwon, a central figure in the $40 billion TerraUSD and Luna collapse, appeared before a U.S. judge shortly after his extradition from Montenegro, where he had served a prison term for using false travel documents while evading authorities for over a year. Prosecutors allege that from 2018 to 2022, Kwon orchestrated a scheme to mislead investors regarding the stability and functionality of TerraUSD, a so-called “algorithmic stablecoin” designed to maintain a $1 peg, along with its companion token Luna. The tokens’ swift crash in May 2022 wiped out an estimated $40 billion in market value. Federal prosecutors, along with the U.S. Securities and Exchange Commission, claim Kwon and Terraform Labs employed secret arrangements and deceptive tactics to prop up the currency’s price, contradicting public statements about its ability to maintain stability on its own. The newly unsealed indictment adds a money laundering charge to the eight existing counts of securities fraud, wire fraud, commodities fraud, and conspiracy. According to court documents, authorities say Kwon’s “constructed financial world was built on lies,” alleging that core products of Terraform Labs did not function as advertised and were manipulated behind the scenes. Prosecutors also point to significant losses incurred by investors who relied on promises of a self-sustaining, decentralized ecosystem. Kwon did not speak during the hearing except to confirm that he understood English. His defense team entered a not guilty plea, emphasizing that market forces, rather than fraudulent conduct, led to TerraUSD’s downfall. Defense lawyers have previously argued that most Terraform Labs token sales did not occur in the United States, disputing the scope of the SEC’s jurisdiction and the extent of the alleged financial damage. How…

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Filed under: News - @ January 4, 2025 2:11 am