Do Kwon, the co-founder of Terraform Labs, appeared in Manhattan federal court on January 2, 2025, and pleaded not guilty to several fraud charges related to the Terra ecosystem’s demise. Authorities accuse the former executive of orchestrating schemes that deceived investors, leading to a loss exceeding $40 billion.
Kwon is facing allegations of wire fraud, securities fraud, commodities fraud, and money laundering. Prosecutors believe that from 2018 until 2022, Kwon made false representations concerning the stability and usefulness of Terraform’s blockchain technologies, defrauding investors worldwide.
After his arrest in Montenegro in March 2023 for using a false passport, Kwon fought extradition to the United States. However, Montenegrin officials opted in December 2024 to send him over, citing the gravity of the charges and international concerns.
In court, Kwon agreed to remain in detention without bail. On January 8, both parties will present evidence and discuss pretrial motions during a follow-up hearing.
US officials have highlighted their determination to hold Kwon accountable. Attorney General Merrick Garland referred to Kwon’s alleged acts as “an elaborate scheme” that used blockchain technology to deceive investors.
The judicial proceedings complicate Kwon’s already difficult situation. Terraform Labs settled a civil fraud complaint with the SEC in June 2024, agreeing to pay $4.47 billion, including substantial fines for the co-founder.
Kwon’s trial is considered a watershed moment for the cryptocurrency industry, illustrating the implications of regulatory violations and fraudulent tactics in digital money.
