Terraform Labs’ CEO is now facing fraud accusations in South Korea, as well as charges from the Securities and Exchange Commission and federal prosecutors in New York.
Do Kwon, the CEO of Terraform Laboratories, has been charged with fraud by US prosecutors in New York, just hours after he was purportedly arrested in Montenegro.
The 31-year-old entrepreneur has been charged with eight separate charges, including commodities fraud, securities fraud, wire fraud, and conspiracy to deceive and engage in market manipulation, according to a court filing filed by United States Attorney Damian Williams.
Under the first charge, conspiracy to defraud, US prosecutors claim jurisdiction over Kwon because he made a series of false and misleading statements about the extent to which the Terra blockchain had been adopted by users during a TV interview broadcast to, among other places, the Southern District of New York.
The next four allegations are related to a series of allegedly false assertions about the ability of the TerraClassicUSD stablecoin (USTC) to maintain its peg to the US dollar, as well as Kwon’s alleged participation in trading techniques aimed to manipulate the market price of USTC.
The filing comes as Montenegro’s interior minister, Filip Adzic, reported on March 23 that an individual suspected of being the former “cryptocurrency king” was detained at the Podgorica airport with “falsified documents.” The suspect, believed to be Kwon, was detained in Podgorica Airport with fellow business partner Hon Chang Joon while attempting to fly to Dubai.
The Montenegrin Interior Ministry revealed in a follow-up tweet that Kwon used falsified travel documents from Costa Rica. According to a March 23 report in Montenegro’s Pobjeda, the Basic State Prosecution Office may soon file criminal charges against Kwon and Joon for using fake travel documents from Costa Rica, which they claim were detected by Interpol.
The crime is thought to come under Article 412 paragraph 2 of Montenegro’s Criminal Code, which carries a maximum prison penalty of three years. A suitcase search turned up counterfeit Belgium travel documents, as well as three laptop computers and five mobile phones, which were confiscated from them, according to Pobjeda.
South Korean prosecutors issued an arrest order against Kwon on Sept. 14, who faces a range of fraud accusations and breaches of capital markets law in his native state. Interpol issued a red alert for his arrest on Oct. 26, and the US Securities and Exchange Commission filed its own fraud accusations on Feb. 16.
The charges against him stem from his alleged role in the failure of the $40 billion Terra Luna Classic (LUNC) token and TerraClassicUSD stablecoin (USTC) in May of last year.
Kwon is said to have travelled between Singapore, Dubai, and Serbia since the collapse. Kwon’s passport was officially canceled by the South Korean foreign ministry on October 20 after he refused to submit it in response to an October 6 directive.