Do Kwon’s LUNA and UST stablecoin collapsed last year, wiping out more than $40 billion from the crypto market.
Terra’s founder Do Kwon is now facing criminal charges in the United States.
Do Kwon Faces Criminal Charges Over Terra’s Collapse
Federal prosecutors in New York have charged Terraform Labs founder Do Kwon with fraud. This latest development comes a few hours after he was arrested by authorities in Montenegro.
Kwon’s location remained a mystery for months following the collapse of the Terra project in May 2022. The Terraform Labs founder is also facing an investigation in South Korea and has been on an Interpol wanted list in connection with the collapse of his LUNA coin and the UST stablecoin.
In addition to this current charge, Kwon is also facing civil charges filed by the U.S. Securities and Exchange Commission, which alleged last month that he misled investors.
According to the filing, Kwon is charged with conspiracy to defraud, commodities fraud, securities fraud, wire fraud and conspiracy to engage in market manipulation. At the moment, the Department of Justice would seek his extradition to the United States. The filing said;
"Kwon agreed with others to defraud purchasers of cryptocurrencies issued by TFL, by deceiving those purchasers about the effectiveness of the algorithmic mechanism that purportedly ensured the stability of UST's price through false statements and market manipulation.”
The filing also claims that Kwon made numerous false and misleading statements of material fact over the past few years, citing TV appearances and tweets from accounts tied to his company.
The filing added that the Terraform creator "contacted representatives of a United States trading and investment firm" for help in "altering the market price of UST," which the company provided.
This latest development comes after Filip Adzic, the interior minister of Montenegro, announced Kwon had been arrested by police at an airport with falsified documents earlier on Thursday. The Korean National Police Agency later confirmed that it was indeed Do Kwon.
LUNA was one of the top 10 cryptocurrencies by market cap prior to its collapse, while UST was one of the leading stablecoins in the crypto market. The collapse of the two coins wiped out more than $40 billion from the cryptocurrency market in May last year.