Both US and South Korean officials are seeking to extradite Terraform Labs CEO Do Kwon, just hours after he was arrested in Montenegro.
United States prosecutors in New York charged the 31-year-old entrepreneur with eight criminal indictments for defrauding American investors who purchased Terra USD and Luna. In a 12-page indictment revealed on Thursday, Kwon was accused of conspiracy to defraud and engage in market manipulation, conspiracy to defraud, and two counts each of wire fraud, commodities fraud, securities fraud.
Earlier in February, the Securities and Exchange Commission accused Do Kwon with fraud, alleging that he orchestrated a multibillion-dollar crypto asset securities fraud. The SEC alleges that Kwon marketed the so-called “algorithmic stablecoin” TerraUSD and a series of inter-connected digital assets as profit-bearing securities, claiming that the tokens would increase in value.
A South Korean court also issued arrest warrants for Kwon and five other people for their alleged role in $40 billion collapse of TerraUSD and LUNA, which devastated retail investors around the world. The Seoul Southern District Prosecutors’ Office asked Interpol to circulate the “red notice” for Do Kwon on charges of manipulating the capital markets. Kwon, who has been on the run since May 2022, denies any wrongdoing as he alleges that capital-markets law doesn’t apply to crypto assets.
Many enforcement authorities and financial regulators, as well as the Interpol, were already on the hunt for Kwon for his alleged involvement in the collapse of terraUSD (UST) stablecoin and the Terra ecosystem.
LUNA tanked to virtually zero in a couple of hours after having peaked close to $120 with a market cap of more than $18.5 billion. Additionally, its sister stablecoin TerraUSD, or UST, lost its dollar peg before the collapse.
Globally, investors in TerraUSD and Luna lost an estimated $42 billion. Worse still, the meltdown has shaken confidence in the broader cryptocurrency industry and led to the failure of several major crypto companies including crypto lender Celsius and crypto fund manager Three Arrows Capital.
The turmoil also set off a domino effect, triggering industry-wide bankruptcies that peaked with the collapse of the world’s second largest crypto exchange, which was part of the disgraced FTX Sam Bankman-Fried’s crypto empire.
