New York (AFP) – South Korean cryptocurrency specialist Do Kwon pleaded guilty to fraud charges in front of a New York judge on Tuesday following his firm’s multi-billion-dollar bankruptcy, court filings showed. Do Kwon, who founded Terraform and nurtured two cryptocurrencies central to the bankruptcy, had faced nine counts in a superseding indictment filed by prosecutors in January 2025 to which he initially pleaded not guilty. The fallen mogul changed his plea in a hearing before Southern District of New York judge Paul Engelmayer, and will be sentenced on December 11, the docket showed.
He was extradited last year from Montenegro to the United States for his role in a fraud linked to his company’s failure, which wiped out about $40 billion of investors’ money and shook global crypto markets. The crypto tycoon was arrested in March 2023 at the airport in Podgorica, the Montenegrin capital, while preparing to board a flight to Dubai, in possession of a fake Costa Rican passport. Before his arrest in the tiny Balkan nation, he had been on the run for months, fleeing South Korea and later Singapore, when his company went bankrupt in 2022.
Do Kwon’s Terraform Labs created a cryptocurrency called TerraUSD that was marketed as a “stablecoin”, a token that is pegged to stable assets such as the US dollar to prevent drastic fluctuations. Do Kwon successfully marketed them as the next big thing in crypto, attracting billions in investments and global hype. Media reports in South Korea described him as a “genius.”
But despite billions in investments, TerraUSD and its sister token Luna went into a death spiral in May 2022. Experts said Kwon had set up a glorified pyramid scheme, in which many investors lost their life savings. He left South Korea before the crash and spent months on the run. Cryptocurrencies have come under increasing scrutiny from regulators after a string of controversies in recent years, including the high-profile collapses of exchanges.
© 2024 AFP
