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Friday, May 24, 2024

Terraform Labs co-founder Do Kwon charged with fraud by U.S. prosecutors

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Terraform Labs co-founder Do Kwon [SCREEN CAPTURE]
Terraform Labs co-founder Do Kwon [SCREEN CAPTURE]

Do Kwon, the Terraform Labs co-founder behind a $40 billion implosion, was charged with fraud by U.S. prosecutors in New York.

In the Thursday indictment, prosecutors accused Kwon of eight counts, including defrauding crypto customers by “deceiving those individuals about aspects of the Terra blockchain, including its technology and the extent to which it had been adopted by users.”

Last month, Kwon was sued by the Securities and Exchange Commission. Its complaint alleges that Terraform and Kwon marketed crypto asset securities to investors to earn a profit, repeatedly claiming that the tokens would increase in value.

Kwon’s Terraform Labs is the developer of cryptocurrencies TerraUSD and Luna, whose simultaneous collapse in value in May last year wiped out about $40 billion in wealth.

TerraUSD was a cryptocurrency designed to be pegged to a fiat currency — in this case, the dollar — while its sister coin Luna was intended to serve as the primary backing asset for TerraUSD and absorb volatility.

Montenegro’s interior minister said that the country’s police had likely arrested Kwon on Thursday in Montenegro.

Interior Minister Filip Adzic announced the arrest via his Twitter account on Thursday afternoon.

The Montenegrin interior minister said that local authorities are working to obtain official confirmation that the detained man is indeed Kwon.

BY JIN MIN-JI [jin.minji@joongang.co.kr]