(Bloomberg) -- Terraform Labs Pte. co-founder Do Kwon pleaded not guilty to US fraud charges tied to the $40 billion collapse of the TerraUSD stablecoin.
Kwon, 33, entered his plea Thursday before a US Magistrate Judge Robert Lehrburger in Manhattan. Through his lawyer, Kwon agreed to be held without bail. He faces nine counts, including wire, securities and commodities fraud.
The former cryptocurrency mogul’s New York court appearance capped a nearly two-year drama over whether Kwon would first be prosecuted in the US or his native South Korea. He was extradited to the US earlier this week by authorities in Montenegro, where Kwon was arrested in March 2023 for traveling on a fake passport.
Prosecutors in both New York and Seoul have charged Kwon in connection with the implosion of Singapore-based Terraform’s TerraUSD, which shook the crypto world in the spring of 2022. The downturn that followed played a role in the collapse of cryptocurrency exchange FTX.
Kwon, who owned 92% of Terraform, will be prosecuted by the Manhattan US attorney’s office, which also prosecuted FTX co-founder Sam Bankman-Fried and other major crypto figures. Bankman-Fried was convicted of seven criminal counts and sentenced to 25 years in prison.
According to US prosecutors, Kwon deceived investors about aspects of the Terra blockchain, including its technology and the extent to which it had been adopted by users.
His lawyer had no comment after the hearing. A conference in the case was scheduled for Jan. 8.
Kwon had already been a fugitive from South Korean charges for months when he and Terraform’s former chief financial officer were caught trying to board a Dubai-bound private jet at the airport in Montenegro’s capital, Podgorica. Both men were convicted and sentenced to four months in prison for traveling with forged documents.
He was charged in New York immediately after his arrest in Montenegro, setting off the tug-of-war with South Korea. Though Montenegro’s justice minister sought to send him to the US, an important security partner for the tiny Balkan nation, a number of courts ruled in favor of South Korea’s request. Kwon himself argued that he should be sent to South Korea, where penalties for financial crimes are typically less severe.
While Kwon was confined in Montenegro, a jury in New York last year found him and Terraform liable in a civil fraud suit brought by the US Securities and Exchange Commission. After the verdict, Terraform agreed to pay $4.47 billion to resolve the SEC case, though the company has since filed for bankruptcy.
The case is US v. Terraform Labs, 23-cr-01346, US District Court, Southern District of New York (Manhattan).
(Updates with plea and background. A previous version of this story corrected the date in the second paragraph.)
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