South Korean crypto entrepreneur Do Hyeong Kwon pleaded not guilty on Thursday to charges outlined in a newly unsealed indictment during his first U.S. court appearance. The hearing took place in Manhattan federal court, two days after Kwon’s extradition from Montenegro.
Indictment Alleges Massive Fraud Scheme
The indictment accuses Kwon, often referred to as the “cryptocurrency king,” of misleading investors between 2018 and 2022. Prosecutors claim Kwon deceived investors into investing in Terraform Labs, the Singapore-based cryptocurrency firm he co-founded, which eventually suffered a catastrophic $40 billion collapse.
The downfall of Terraform Labs occurred in May 2022, despite the company’s assurances that its TerraUSD token was a stablecoin, offering reliability to investors. The crash led to widespread financial damage for investors around the world.
Kwon Faces Multiple Charges
Kwon, who remained silent during the proceedings except for confirming his understanding of English, was represented by his lawyers, Andrew Chesley and David Patton. Chesley entered a not guilty plea to the charges, which include conspiracy, securities and commodities fraud, wire fraud, and money laundering.
Kwon’s legal team declined to comment after the court session, and Kwon was remanded to federal custody, with his lawyers agreeing to his detention.
Details of the Indictment
The superseding indictment highlights allegations that Kwon misled investors by falsely claiming that Terraform Labs had developed groundbreaking financial technologies. These technologies were marketed as a new decentralized financial system, featuring its own money, payment system, stock market, and savings bank.
However, the indictment states that this system was built on deception. It claims that the core products behind Terraform Labs did not function as advertised, and Kwon manipulated these products to create a false image of a successful and decentralized financial system. The goal was to lure in investors with promises of reliable returns that were never realized.
The Road Ahead for Do Kwon
As Kwon faces these serious charges, his legal battle is just beginning. The case is expected to draw significant attention given the high-profile collapse of Terraform Labs and the damage it caused to investors worldwide.
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