- Do Kwon faces 8 criminal charges in the US for the Terra-Luna collapse and fraud.
- The Terra-Luna crash caused $40B in losses, leading to Terraform Labs’ bankruptcy.
- Kwon could face up to 130 years in prison if convicted of all charges.
Do Kwon, the co-founder of Terraform Labs, faces multiple criminal charges in the United States, including conspiracy to commit fraud and market manipulation. These charges stem from the May 2022 collapse of the Terra-Luna stablecoin.
Prosecutors from the Southern District of New York have charged Kwon with eight criminal offenses. They accuse him of defrauding investors and misleading them about the capabilities of the Terra blockchain and its stablecoin protocol. Kwon’s return from Montenegro to the United States has brought renewed attention to the case, which could significantly impact the crypto industry.
The Collapse of Terra-Luna and Investor Losses
The Terra-Luna collapse sent shockwaves through the crypto market, leading to over $40 billion in investor losses globally. Prosecutors claim Kwon’s actions contributed to this failure. They allege he made false statements about the stability and functionality of Terra’s blockchain technology and stablecoin.
Read also : Terraform Labs Co-founder Do Kwon Extradition Approved by Montenegro Supreme Court
In addition, the SEC has found Kwon and Terraform Labs responsible for civil fraud, resulting in a $4.45 billion settlement. Following these legal actions, Terraform Labs filed for bankruptcy.
Criminal Charges and Legal Proceedings
The charges against Kwon involve commodities, securities, wire fraud, and conspiracy to engage in money laundering. If convicted on all charges, Kwon faces a maximum sentence of 130 years in prison.
Furthermore, Kwon faces allegations of executing false schemes related to Terraform’s digital assets between 2018 and 2022. The accusations stem from claims that Kwon misled investors with false claims about the efficiency of the Terra network and its potential for broad adoption.
Kwon was arrested in March 2023 in Montenegro while attempting to flee with a forged passport. This led to his extradition to the United States. His case is now before Judge John P. Cronan in the U.S. District Court. A court session is scheduled for January 8, 2025, to determine the next steps in this high-profile trial.
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