New York, NY — Do Hyeong Kwon, the 33-year-old South Korean co-founder of Terraform Labs, appeared in a New York court on Thursday to face fraud charges related to the multi-billion-dollar collapse of his cryptocurrency company.
Kwon, once the CEO of Terraform Labs, was extradited from Montenegro on Tuesday after months of evading capture. He is accused of deceiving investors and artificially inflating the value of his firm’s cryptocurrencies, TerraUSD and its sister token Luna, which led to a devastating crash in May 2022.
Following the collapse, Terraform’s cryptocurrencies lost over $40 billion in value, resulting in massive financial losses for investors worldwide. Attorney General Merrick Garland emphasized that Kwon would now be held accountable in the U.S. legal system for his role in the catastrophic collapse.
Kwon, who had fled South Korea and later Singapore before his arrest, is facing charges including commodities fraud, securities fraud, wire fraud, and money laundering. He could face up to 130 years in prison if convicted on all charges.
Prior to his arrest, Kwon had been attempting to board a flight to Dubai in March 2023 when he was apprehended in Podgorica, Montenegro. He was found in possession of a fraudulent passport.
Terraform Labs had introduced the TerraUSD stablecoin, which was designed to maintain a stable value pegged to the U.S. dollar. The coin gained significant attention and investment globally, drawing praise for its innovation. However, experts later revealed that Kwon’s cryptocurrency scheme resembled a Ponzi scheme, with investors losing significant amounts of money when the system collapsed in May 2022.
As cryptocurrencies face increasing scrutiny from regulators, Kwon’s case highlights the growing risks and challenges in the volatile digital asset market. The U.S. authorities have made clear their intention to hold Kwon accountable for the harm caused by the Terraform Labs collapse.