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The Terraform Labs CEO is now facing fraud charges in South Korea, the Securities and Exchange Commission and federal prosecutors in New York.
Terraform Labs CEO Do Kwon has been charged with fraud by United States prosecutors in New York, just hours after he was reportedly arrested in Montenegro.
In a court filing signed by United States Attorney Damian Williams, the 31-year-old entrepreneur has been charged with eight separate counts, including commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation.
Under the first charge, conspiracy to defraud, the U.S. prosecutors claim to have jurisdiction over Kwon because he made a series of false and misleading statements during a TV interview that was transmitted to — among other places — the Southern District of New York, about the extent to which the Terra blockchain had been adopted by users.
The remaining four charges are related to a series of purportedly misleading statements about the effectiveness of the TerraClassicUSD stablecoin (USTC) to keep its peg with the U.S. dollar, as well as Kwon’s alleged involvement in trading strategies that were designed to alter the market price of USTC.
Translation from Montenegro Minister of Interior Filip Adzic - “ONE OF THE WORLD'S MOST WANTED FUGITIVES WAS ARRESTED IN PODGORICA
Montenegrin police have detained a person suspected of being one of the most wanted fugitives, South Korean citizen Do Kwon…” https://t.co/sCJ0FFrlEk
— Simon Dixon (@SimonDixonTwitt) March 23, 2023
The filing comes as Filip Adzic, the minister of interior of Montenegro, 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 trying to fly to Dubai, Adzic stated.
In a follow-up tweet, the Montenegro Interior Ministry reported that Kwon used forged travel documents from Costa Rica.
Criminal charges in Montenegro
According to a report by Montenegro-based newspaper Pobjeda on March 23, the Basic State Prosecution Office may soon press criminal charges against Kwon and Joon for using forged travel documents from Costa Rica, which they say was first discovered by Interpol.
A luggage search also found forged Belgium travel documents along with three laptops and five mobile phones, which were taken from them, Pobjeda reported.
South Korean prosecutors issued an arrest warrant against Kwon on Sept. 14, who faces a series of fraud charges and breaches of capital markets law in his home state. Also, Interpol on Sept. 26 issued a red notice listing for his arrest, and the United States Securities Exchange Commission filed fraud charges of its own on Feb. 16.
— CoinGecko (@coingecko) March 23, 2023
Since the collapse, Kwon has reportedly moved between Singapore, Dubai and Serbia.
The South Korean foreign ministry officially canceled Kwon’s passport on Oct. 20 after he failed to surrender his passport following an October 6 order.
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