US court indicts Do Kwon on fraud charges after his arrest

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Do Kwon, the founder of the Terra Luna ecosystem, which collapsed in May last year and triggered a chain of collapses in the crypto sector, is facing fraud charges by US prosecutors. The charges follow Do Kwon’s arrest in Montenegro.

Do Kwon faces fraud charges in the US

The US District Court in Manhattan revealed that Do Kwon is facing an eight-count indictment. The indictment comes a few hours after news that the Terra founder was arrested on Thursday in Montenegro.

The lawyers representing Do Kwon in the US have yet to issue a statement in response to the charges facing the crypto entrepreneur. The indictment charges accuse Do Kwon of two counts of conspiracy, securities fraud, wire fraud, and commodities fraud.

Do Kwon is a South Korean national behind Terraform Labs. He also developed the TerraUSD stablecoin and the LUNA cryptocurrency. However, the UST stablecoin lost its peg in May, triggering a broader collapse of the entire Terra ecosystem.

The criminal charges against Do Kwon come after the US Securities and Exchange Commission (SEC) imposed civil charges against Kwon and Terraform Labs in February. Since the collapse of Terra, Kwon has been sought by several regulators, but he has remained a fugitive. In September last year, South Korean authorities issued an arrest warrant against him.

South Korean law enforcement issued a statement after Kwon’s arrest saying they had confirmed that the identity of the individual arrested in Montenegro was indeed Kwon. His fingerprints matched the data contained within the country’s National Police Agency.

An official from the KNPA also noted that the details pertaining to this arrest had been stored with Interpol offices in Montenegro and the Seoul Southern District Prosecutors’ Office. Prosecutors will also work alongside other institutions for the repatriation of Kwon.

The interior minister for Montenegro, Filip Adzic, also released a statement on Kwon’s arrest saying that he was arrested alongside a second suspect. The two were trying to board a flight to Dubai. The police also found forged passports with the two suspects. The passports were from Belgium and Costa Rica.

Arrests follow the collapse of Terra

The interior minister noted that Kwon was one of the most wanted fugitives, with his arrest being linked to the collapse of Terraform Labs, a crypto firm based in Singapore. “The former cryptocurrency king, behind losses of over $40 billion, has been apprehended at the Podgorica airport with forged documents,” Adzic said.

TerraUSD is a stablecoin that was supposed to maintain its $1 peg amid a fluctuation in the value of Luna. However, it lost its peg, triggering a downfall in the entire Luna ecosystem. Regulators have been looking to arrest Do Kwon because of the losses suffered by investors after the collapse.

The CEC filed a civil case against Kwon and Terraform Labs, accusing him of orchestrating a multi-billion crypto asset securities fraud. The SEC also said that Kwon misled investors about the Terra ecosystem.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.