New York (AFP) – The South Korean co-founder of Terraform Labs appeared in a New York court on Thursday to face fraud charges stemming from the multi-billion-dollar collapse of his cryptocurrency company. Do Hyeong Kwon, 33, was extradited to the United States from Montenegro on Tuesday. Kwon, the former chief executive of Terraform, is accused of deceiving investors to fraudulently inflate the value of his firm’s cryptocurrencies.
“Do Hyeong Kwon will now be held accountable in an American courtroom for… his elaborate schemes involving Terraform’s cryptocurrencies, which resulted in over $40 billion in investor losses,” Attorney General Merrick Garland said in a statement. US Attorney Daniel Gitner said the May 2022 crash of Terraform’s cryptocurrencies “erased over $40 billion in investor assets, causing devastating losses to countless investors in the United States and around the world.”
Kwon, who is also wanted in South Korea, is charged in the United States with commodities fraud, securities fraud, wire fraud, and money laundering, and faces up to 130 years in prison if convicted of all charges. The crypto tycoon was arrested in March 2023 at an 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. Montenegro deported Kwon’s business partner — identified only by his initials J.C.H. — to South Korea in early February. Terraform 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. Kwon successfully marketed it 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 went 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
