US Prosecutors Charge Do Kwon With Multiple Counts of Wire, Securities Fraud

After several months filled with elusive rumors from around the world, this Thursday brought a deluge of developments surrounding Terraform Labs’s founder Do Kwon. Several hours after his arrest by Montenegrin police was confirmed, the crypto magnate was also reportedly charged with fraud by US prosecutors.

This Thursday, Do Kwon, the founder and CEO of Terraform Labs, was charged with fraud by US prosecutors in New York. The lawsuit alleges multiple counts of securities and wire fraud, as well as multiple counts of conspiracy to commit fraud. Kwon is already facing charges in his native South Korea and has been an international fugitive since September when Interpol issued a red notice for his arrest.

On March 13th, it was reported that the Department of Justice was conducting an investigation into the LUNA collapse. At the time, it was alleged that the probe was centered on Do Kwon, Jump Capita, Jane Street, and Alameda Research. Additionally, the Securities and Exchange Commission filed its complaint in mid-February, also alleging fraud. 

Kwon is held responsible for the catastrophic collapse of the LUNA ecosystem which occurred in May of 2022 after the algorithmic stablecoin Terra USD lost its dollar peg causing LUNA to drop 50% in a single day. The calamity wiped out an estimated $60 billion worth of investments and is seen as one of the two biggest events of the “crypto winter”, together with the downfall of FTX.

Earlier on March 23rf, the Minister of the Interior of Montenegro announced on Twitter that the country’s police arrested a man suspected of being Do Kwon at the Podgorica airport. Later, the arrest was confirmed as well as the arrest of Terraform’s CFO, Hon Chang Joon. The pair was reportedly attempting to board a flight to Dubai using fake Costa Rican documents. 

Montenegrin police also found and seized falsified Belgian documents, as well as three laptops and five mobile phones. Kwon has reportedly been in the Balkans since at least December when it was alleged he was hiding in Serbia. Neither of the countries has a direct extradition agreement with South Korea, but Kwon will likely be delivered to the relevant authorities as both countries are signatories of the European Convention on Extradition.

South Koran authorities issued an arrest warrant for Kwon in mid-September and took the search international through an Interpol red notice later in the same month. They also revoked his passport in October. Up until going silent last December, Do Kwon was consistently claiming he was neither on the run nor in hiding.

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