Former Cryptocurrency CEO Extradited to US to Face Fraud Charges
Do Hyeong Kwon, a South Korean national and co-founder of a cryptocurrency business, has been extradited to the United States to face allegations of fraud. The 33-year-old appeared in a Manhattan court after being extradited from Montenegro, where he had been residing.
According to the Department of Justice (DoJ), Kwon is accused of defrauding investors in Terraform cryptocurrencies between 2018 and 2022, resulting in losses exceeding $40 billion. The charges claim that Kwon deliberately misled investors by making false claims about Terraform’s products, creating a facade of a fully functional and stable decentralized finance system.
Among the fraudulent activities alleged by the DoJ, Kwon is said to have inflated the value of Terraform cryptocurrencies by selling them to investors in exchange for billions of dollars’ worth of other assets. The misrepresentations made by Kwon include false claims about the Terra Protocol, the Luna Foundation Guard, the Mirror Protocol, the relationship between Chai and the Terra blockchain, and the misuse of stablecoins known as “Genesis.”
Despite attempts to cover up weaknesses in the Terra protocol when the UST’s dollar peg began to falter in May 2021, Kwon allegedly failed to sustain the illusion a year later, leading to a significant crash in the value of UST and Luna currencies.
The charges brought against Kwon include commodities fraud, securities fraud, wire fraud, and money laundering, which collectively carry a maximum prison sentence of 130 years.
This case sheds light on the risks associated with investing in the cryptocurrency market and underscores the importance of due diligence and regulatory oversight in the industry.
For more information on cryptocurrency fraud and related cases, you can refer to the SEC Charges Man With $42 Million Crypto Fraud Scheme.