Kwon Do-hyeong (C), co-founder of Terraform Labs, is handed over to U.S. authorities in Montenegro on Dec. 31, 2024, in this photo provided by the Montenegrin police agency. (Image courtesy of Yonhap)
WASHINGTON, Jan. 2 (Korea Bizwire) — South Korean crypto mogul Kwon Do-hyeong could face up to 130 years in prison if he is convicted of all fraud and other charges, the U.S. Justice Department said Thursday, as he made his initial appearance in a New York court and pleaded not guilty to those charges.
Kwon, 33, entered the plea in a Manhattan federal court, the Associated Press and Reuters reported, as the co-founder of Terraform Labs has been facing allegations that he engaged in schemes to deceive investors to fraudulently inflate the value of Terraform’s cryptocurrencies.
Citing his indictment, the Justice Department alleged that from 2018 to 2022, Kwon orchestrated schemes to defraud purchasers of Terraform cryptocurrencies, and that he made false and misleading claims about the stability and efficacy of Terraform’s cryptocurrency stablecoin protocol and its use of blockchain technology, among other things.
The crash of Terraform’s cryptocurrencies in May 2022 erased over US$40 billion in losses to numerous investors in the United States and around the world, according to the indictment.
Kwon’s charges include commodities fraud, securities fraud, wire fraud and money laundering conspiracy. If convicted of all those charges, Kwon faces a maximum penalty of 130 years in prison, the department said.
Kwon’s case is assigned to U.S. District Court Judge John Cronan and will appear before the judge for an initial conference Wednesday, according to the department.
“Do Hyeong Kwon will now be held accountable in an American courtroom for, as alleged in court documents, his elaborate schemes involving Terraform’s cryptocurrencies, which resulted in over $40 billion in investor losses,” Attorney General Merrick Garland was quoted as saying in a press release.
“We secured this extradition despite Kwon’s alleged attempt to cover his tracks by laundering proceeds of his schemes and trying to use a fraudulent passport to travel to a country that did not have an extradition treaty with the United States,” the official added.
His extradition to the U.S. came nearly two years after Kwon was arrested in Montenegro in March 2023 for traveling on a fake passport. He was previously charged in the Southern District of New York in an initial indictment in March 2023.
Kwon had been wanted by both South Korea and the U.S. for an investigation on charges connected to the massive crash of TerraUSD and Luna coins run by his company.
Kwon had sought legal action in Montenegro to be repatriated to South Korea to face legal proceedings, but the Montenegrin court rejected his appeals.
(Yonhap)
