KEY POINTS
- Kwon was arrested in Montenegro on Thursday
- He is facing a criminal case in Montenegro for using forged travel documents
- The U.S. attorney’s office in Manhattan indicted Kwon with eight separate charges
Just hours after news broke that crypto kingpin and fugitive Do Kwon was arrested in Montenegro, prosecutors in New York charged him with fraud in connection to the $40 billion Terra crash in May 2022.
The cryptocurrency space was very alive Thursday as the industry was shaken by the arrest of Kwon, 31, who maintained over the past months that he was never on the run.
The day even became more interesting when the U.S. attorney’s office in Manhattan indicted the Terraform Labs CEO for orchestrating cryptocurrency fraud.
The court filing signed by United States Attorney Damian Williams revealed that the crypto mogul was charged with eight separate charges, which include securities fraud, commodities fraud, wire fraud and conspiracy to defraud and engage in market manipulation.
U.S. prosecutors noted in the 12-page indictment that the Stanford graduate defrauded customers by “deceiving those individuals about aspects of the Terra blockchain, including its technology and the extent to which it had been adopted by users.”
The U.S. prosecutors claim to have jurisdiction over Kwon on his first charge, which is the conspiracy to defraud, since the crypto executive allegedly made a series of misleading and false statements during a TV interview that was transmitted in many regions of the world, especially in the Southern District of New York.
The other charges are connected to a series of supposed misleading statements on the effectiveness of the so-called algorithmic stablecoin of terraform Labs (TFL) to maintain its peg with the U.S. dollar and the crypto executive’s involvement in trading schemes designed to manipulate the market price of TerraUSD (UST).
If Kwon is extradited to New York, he will be facing prosecution by the same office handling a criminal case against another controversial crypto kingpin, Sam Bankman-Fried, the co-founder and former CEO of the cryptocurrency empire FTX, who was himself extradited to the United States from the Bahamas last year.
The Basic State Prosecution Office of Montenegro will also press criminal charges against Kwon for his forged travel documents from Costa Rica, believed to be the place where the Interpol first discovered his whereabouts, a local news outlet said.
Kwon’s act is a criminal offense under Article 412 paragraph 2 of the Criminal Code of Montenegro and carries a maximum prison time of three years.
Montenegrin authorities also discovered during a luggage search that Kwon possessed forged Belgium travel documents, three laptops and five mobile phones.
The spectacular collapse of the Singapore-based terraform Labs in May 2022 shocked the cryptocurrency industry since the company prided its so-called algorithmic stablecoin UST as one designed to maintain a constant 1:1 peg to the U.S. dollar because of its algorithms.
A lawyer for Kwon did not immediately respond to a request for comment, The Wall Street Journal and Financial Times reported.
