Bloomberg — Terraform Labs co-founder Do Kwon, who presided over a cryptocurrency implosion of more than $40 billion last year, has been charged with fraud by the US attorney’s office in New York.
Thursday’s indictment followed news of Kwon’s arrest earlier that day in Montenegro.
A federal grand jury in Manhattan indicted Kwon, 31, on eight counts: securities fraud, commodities fraud, wire fraud and conspiracy. Kwon was also sued a little over a month ago by the Securities and Exchange Commission.
It is not clear if he was detained at the request of the US authorities. He too is facing a warrant for his arrest in South Korea.
Kwon found himself at the center of one of the most disruptive episodes in the cryptocurrency industry last May, when the TerraUSD stablecoin, which he helped create, and its sister token Luna suddenly went under.
According to the US indictment, Kwon allegedly misled investors about aspects of the Terra blockchain, including its technology and the degree to which it had been adopted by users.
The US prosecution cites false and misleading statements Kwon made in a television interview and on social media about the alleged scheme. Prosecutors also accuse Kwon of misleading buyers of cryptocurrencies issued by Terraform Labs, including Luna and UST.
Another count in the indictment accuses Kwon of engaging in market manipulation with an unnamed US trading company to alter the market price of UST.
Kwon was arrested in Podgorica (Montenegro) along with Hon Chang Joon, Terraform’s financial director, when they tried to fly to Dubai with forged Costa Rican travel documents, the Balkan country’s Ministry of the Interior said in a statement on Thursday.
According to the Ministry, Belgian and South Korean travel documents were also found; the Belgians were fake, according to Interpol. Police also seized three laptops and five mobile phones from the couple, according to the ministry.
Kwon’s whereabouts have been the source of constant speculation since September, when authorities in his native South Korea issued an arrest warrant against him for alleged violations of capital market law. The country has withdrawn his passport and has declared that he is the subject of an Interpol red notice.
–With assistance from Greg Farrell.
Read more at Bloomberg.com
