Do Kwon denies fraud allegations: $40 billion Cryptocurrency collapse case enters US trial

Terraform Labs co-founder Do Kwon appeared in court in the United States on January 2, pleading not guilty to fraud charges related to the collapse of TerraUSD (UST) Stablecoin. The case involves losses of over $40 billion and has become one of the most prominent legal cases in the coin encryption industry.

First Court Appearance: Denies Nine Fraud Charges

Do Kwon appeared in the Manhattan District Court and denied all charges in front of US Magistrate Robert Lehrburger. He agreed to be detained without bail and faces nine charges including wire fraud, securities fraud, and commodity fraud. These charges stem from the collapse of Terraform Labs, which caused market turmoil due to the sharp decline in the prices of its stablecoins LUNA and UST.

Transnational Legal Battle: US and South Korea Fight for Jurisdiction

Do Kwon was arrested in Montenegro in March 2023 when he attempted to leave the country using a fake passport. Following his arrest, Montenegro became a battleground for the extradition rights between the United States and South Korea. Both countries accused Do Kwon of involvement in fraud, with South Korea seeking extradition based on his citizenship, while Do Kwon tried to avoid being sent to the United States because South Korea's punishment for financial crimes is relatively lighter.

However, the Constitutional Court of Montenegro rejected Do Kwon's extradition appeal to South Korea on December 26, 2023, and a few days later the Minister of Justice of Montenegro signed the extradition order. On December 31, it was handed over to the US authorities by the Montenegrin police.

The prosecution alleges: misleading investors leading to platform collapse

The Manhattan prosecutor's office, which successfully prosecuted FTX co-founder Sam Bankman-Fried in 2024, has accused Do Kwon of deliberately misleading investors by exaggerating the technical capabilities and market adoption of the Terra blockchain, which is considered the direct cause of the platform's catastrophic collapse. This trial has attracted much attention.

SEC demands a $4.47 billion compensation

In addition to criminal charges, Do Kwon has been found guilty of fraud in a civil case. The civil case brought by the US Securities and Exchange Commission (SEC) resulted in Do Kwon and Terraform Labs being ordered to pay $4.47 billion in compensation. Subsequently, Terraform Labs announced bankruptcy.

1/8 The upcoming high-profile trial

Do Kwon's lawyer declined to comment on the case after appearing in court. Currently, the next court hearing is scheduled for January 8th and will mark the beginning of this high-profile encryption trial in the Southern District of New York, which could become [].

This article Do Kwon denies fraud allegations: a potential $40 billion coin collapse case enters US trial first appeared on Chain News ABMedia.