Do Kwon, a former cryptocurrency executive, is set to appear in a US court on criminal fraud charges

Written by Luke Cohen

NEW YORK (Reuters) – Do Kwon, the South Korean cryptocurrency entrepreneur behind two digital currencies that lost an estimated $40 billion in 2022, is scheduled to appear in a U.S. court on Thursday to face criminal fraud charges following his extradition from Montenegro. this week.

Federal prosecutors in Manhattan in March 2023 charged Kwon, who co-founded Terraform Labs and developed the TerraUSD and Luna currencies, with two counts of securities fraud, wire fraud, commodity fraud, and conspiracy.

Kwon denied any wrongdoing. Last June, he agreed to pay an $80 million civil fine and be banned from cryptocurrency transactions as part of a $4.55 billion settlement he and Terraform reached with the U.S. Securities and Exchange Commission.

He is scheduled to appear at 12:30 pm EST (1730 GMT) before US Judge Robert Lerberger in Manhattan Federal Court.

Last April, a federal jury in Manhattan found Kwon and Terraform liable in a civil trial for defrauding cryptocurrency investors.

A lawyer for Terraform said in closing arguments that Terraform and Kwon were honest about their products and how they worked, even when they failed.

Kwon did not attend that trial because he had been detained in Montenegro since March 2023. Terraform declared bankruptcy last January.

The SEC and the US Attorney’s Office in Manhattan allege that Kwon misled investors in 2021 about the stability of TerraUSD, a so-called stablecoin designed to maintain the value of $1.

Kwon also developed Luna, a more traditional token whose value fluctuated but was closely linked to TerraUSD.

The collapse of TerraUSD and Luna in 2022 led to a decline in the value of other cryptocurrencies, including Bitcoin, and caused wider devastation in the cryptocurrency market.

Kwon, 33, is one of several cryptocurrency tycoons facing federal charges after a 2022 slump in cryptocurrency prices led to the collapse of a number of companies in the space.

Sam Bankman-Fried, who founded the FTX exchange, is appealing his conviction and 25-year prison sentence last March for stealing $8 billion from customers.

Alex Mashinsky, founder and former CEO of cryptocurrency lending network Celsius, pleaded guilty last month to two counts of fraud.

(Reporting by Luke Cohen in New York; Editing by Kevin Levy)