Do Hyeong Kwon, South Korean Crypto Mogul, Faces $40 Billion Fraud Charges
In a major development in the world of cryptocurrency, Do Hyeong Kwon, the CEO behind the crypto platform Terraform, has been charged by U.S. federal authorities for allegedly defrauding investors of more than $40 billion. Kwon, 33, was extradited from Montenegro on New Year’s Eve and faces multiple counts of securities and wire fraud following the collapse of Terraform between 2018 and 2022.
Kwon is accused of deceiving investors by advertising Terraform’s “stablecoin” as a secure investment tied to assets like other cryptocurrencies or the U.S. dollar. However, prosecutors claim that Kwon manipulated the value of his cryptocurrencies and used faulty algorithms to prop up the value, misleading thousands of investors globally.
The downfall of Terraform occurred in May 2022, when the value of its digital assets crashed, causing devastating losses for hundreds of thousands of investors. The alleged scheme, which operated for years, involved high-frequency trading firms artificially supporting the value of Terraform’s cryptocurrencies. Kwon also used automated trading bots and fake blockchain transactions to create the illusion of liquidity and demand for Terraform’s assets.
According to U.S. Attorney Daniel M. Gitner, the fraudulent activities resulted in over $40 billion in investor losses, with Kwon attempting to cover up his tracks through misleading audits and efforts to flee with millions of dollars laundered via cryptocurrency exchanges and international bank accounts.
Kwon’s actions were further complicated by his attempts to seek political protection in various countries and his refusal to cooperate with authorities. In a recorded conversation in August 2022, Kwon allegedly instructed associates to disregard law enforcement inquiries.
If convicted, Kwon faces a maximum sentence of 130 years in prison for his role in one of the largest cryptocurrency frauds in history.
