Founder of Terraform Labs Charged with Fraud and Arrested in Montenegro after Months on the Run
Terraform Labs founder Do Kwon has been charged with fraud by federal prosecutors in New York and will be extradited to the US, after he was arrested in Montenegro in connection with the collapse of terraUSD.
Do Kwon, the founder of Terraform Labs, has been charged with fraud by federal prosecutors in New York, hours after being arrested in Montenegro. Kwon, who has been on an Interpol wanted list, also faces an investigation in South Korea in connection with the collapse of terraUSD.
He already faced civil charges filed by the US Securities and Exchange Commission (SEC) in February, alleging that he misled investors. The charges include conspiracy to defraud, commodities fraud, securities fraud, wire fraud, and conspiracy to engage in market manipulation. The DOJ has confirmed that it will seek Kwon's extradition to the US.
The complaint alleges that Kwon made several "untrue and misleading statements of material fact" over several years, citing TV appearances and tweets from accounts linked to Terraform Labs. Kwon allegedly agreed to defraud purchasers of cryptocurrencies issued by TFL by deceiving them about the effectiveness of the algorithmic mechanism that supposedly ensured the stability of UST's price through false statements and market manipulation.
The filing said that Kwon "contacted representatives of a United States trading and investment firm" for help in "altering the market price of UST," which the company provided. Filip Adzic, the interior minister of Montenegro, announced that Kwon had been arrested by police at an airport with falsified documents. The Korean National Police Agency later confirmed his identity.
