Former cryptocurrency chief Do Kwon has been brought to New York to face fraud charges

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South Korean cryptocurrency tycoon Do Kwon made his first appearance in a Manhattan courtroom on Thursday after the co-founder of bankrupt cryptocurrency company Terraform Labs was extradited from Montenegro to face criminal charges in the United States.

The new indictment unsealed Thursday adds a new money laundering charge to the list of charges Eight original charges Announced last year against Kwon – which included securities, commodities and online fraud – due to the collapse of Terraform Labs in 2022, resulting in the loss of $40 billion in TerraUSD and luna tokens.

The latest indictment alleges that Kwon made a series of false disclosures and lies to investors, regulators and across social media about a range of cryptocurrency products and platforms associated with Terraform Labs. The new charge covers alleged conduct from 2022 to April 2024 and refers to wire transfers and cryptocurrencies worth more than $10,000 in “criminally derived property.”

“The financial world created by Kwon was built on lies, manipulation and deception tactics used to mislead investors, users, business partners and government regulators regarding Terraform’s business,” the indictment reads.

“Behind the scenes, Terraform’s core products did not work as Kwon advertised, and were manipulated to create the illusion of an efficient, decentralized financial system in order to attract investors,” she added.

The collapse of TerraUSD unleashed an unprecedented collapse in… Crypto markets It sparked a South Korean investigation into Kwon’s case. He was previously charged with fraud and violating capital markets law in his home country, leading to an international manhunt after authorities were unable to locate him.

Kwon was eventually arrested in Montenegro in 2023, after he was discovered attempting to travel to the United Arab Emirates, which does not have an extradition treaty with the United States, while using a fake Costa Rican passport. The US criminal charges against him were revealed hours later.

Montenegro handed Kwon over to US officials and FBI agents on Tuesday at an airport in Podgorica, the country’s capital. South Korea also requested his extradition.

Kwon previously denied any wrongdoing and pleaded not guilty during a brief court hearing on Thursday. Kwon’s lawyers did not immediately respond to a request for comment.

TerraUSD was one of the largest stablecoins – crypto tokens linked to real assets; In this case, the US dollar — at the time of its collapse.

The almost overnight collapse of TerraUSD and its cryptocurrency, Luna, marked the beginning of a brutal year for cryptocurrencies, culminating in the downfall of FTX and its founder Sam Bankman-Fried in late 2022. Bankman-Fried was convicted of fraud and is appealing against his 25-year prison sentence. He received it in March 2024 for stealing $8 billion from cryptocurrency customers.

Kwon and Terraform Labs were found liable for fraud last April in a civil case brought by the Securities and Exchange Commission, and the regulator in June was awarded compensation. $4.5 billion fine Payment will be made by the company and Kwon through settlement. The company filed for Chapter 11 bankruptcy protection in January.