$40 BILLION Fraud! Crypto Kingpin Extradited to US

Terraform Labs’ Do Kwon is back on U.S. soil, facing massive fraud charges after allegedly wiping out $40 billion in investor funds. 🌐 #News #NewYorkNY #NewYork #Crime

NEW YORK, NY – In a dramatic development in the world of cryptocurrency, Terraform Labs co-founder Do Kwon has been extradited to the United States. The tech entrepreneur faces charges in a fraud and money laundering scheme that allegedly wiped out $40 billion in investor assets, according to the U.S. Attorney’s Office for the Southern District of New York.

Extradition and Arrest Details

Do Kwon, a 33-year-old South Korean citizen, landed in the U.S. on December 31, 2024, after being extradited from Montenegro. His arrest in Europe dates back to March 2023 when he was caught attempting to travel using a forged passport.

Authorities believe Kwon was trying to enter a country without an extradition treaty with the United States.

U.S. Attorney Daniel M. Gitner announced, “A federal grand jury has indicted Do Kwon for misleading his investors in order to fraudulently inflate the value of Terraform’s cryptocurrencies, and laundering the proceeds of his crimes.”

Gitner further explained that the crash of Terraform’s digital currencies in May 2022 led to over $40 billion in investor losses globally.

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Alleged Fraud Schemes

Between 2018 and the collapse of Terraform in 2022, Kwon allegedly orchestrated multiple fraudulent schemes to deceive investors about the stability and value of Terraform’s cryptocurrencies. According to the indictment:

Stablecoin Manipulation: Kwon falsely claimed that the Terra Protocol maintained the peg of the TerraUSD stablecoin to the U.S. dollar. After the protocol failed in May 2021, he collaborated with a high-frequency trading firm to artificially support TerraUSD’s value.

Mirror Protocol Control: Kwon promoted Mirror Protocol as a decentralized platform for trading synthetic stocks. However, he allegedly concealed that Terraform secretly controlled its operations.

False Claims About Chai: Kwon is accused of misleading investors by asserting that the Terra blockchain was being used to process billions in transactions for the Korean payment app Chai. Investigators found that Chai’s transactions were actually handled through traditional financial networks.

Genesis Stablecoins Misuse: Prosecutors allege Kwon lied about the reserve status of one billion Genesis Stablecoins programmed into the Terra blockchain. Instead, he used $145 million of these coins for market manipulation, including fake Chai transactions and trading bots to influence synthetic asset prices.

FBI Assistant Director James E. Dennehy remarked, “Do Kwon, co-founder and former CEO of Terraform, allegedly defrauded investors by falsely advertising the company’s blockchain products as decentralized, reliable, and effective, and by engaging in market manipulation, ultimately resulting in more than $40 billion in investor losses.”

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Charges and Possible Sentence

Kwon faces a range of criminal charges:

Two counts of commodities fraud, each carrying a maximum sentence of 10 years in prison.
Two counts of securities fraud, with each count punishable by up to 20 years.
Two counts of wire fraud, each carrying up to 20 years.
Two counts of conspiracy to commit fraud, each punishable by up to 5 years.
One count of conspiracy to commit money laundering, with a potential sentence of 20 years.

In total, Kwon could face up to 130 years in prison if convicted on all charges.

Attorney General Merrick B. Garland commented, “We secured this extradition despite Kwon’s alleged attempt to cover his tracks by laundering proceeds of his schemes and trying to use a fraudulent passport to travel to a country that did not have an extradition treaty with the U.S. This extradition from Montenegro is an example of the Justice Department’s international partnerships, which enable the pursuit of criminals wherever they attempt to hide.”

RELATED TOPICS: Crime | New York | South Korea | Tech