Key takeaways:
- After being detained in Montenegro, Do Kwon, the CEO of Terraform Labs, was charged by US officials with fraud.
- Do Kwon is charged with eight counts, including conspiracy and fraud involving commodities and stocks.
The CEO of Terraform Labs, Do Kwon, is reportedly being held in Montenegro, but just hours later, US prosecutors in New York have filed fraud charges against him.
The 31-year-old businessman is accused of eight different crimes, including commodities fraud, securities fraud, wire fraud, plot to commit fraud, and market manipulation, according to a court document signed by United States Attorney Damian Williams.
Kwon is charged with violating the first count of conspiracy to defraud because it is alleged that during a TV interview that was aired, among other places, to the Southern District of New York, he made several false and misleading claims about the rate of user adoption of the Terra blockchain.
The remaining four allegations center on several exaggerated statements made about the TerraClassicUSD stablecoin’s (USTC) ability to keep its peg to the US dollar and Kwon’s alleged involvement in strategies for trading that seek to alter the USTC market price.
The application was submitted at the same time when Filip Adzic, Montenegro’s interior minister, claimed a person with “falsified documents” has been detained at the Podgorica airport, who is the founder and former CEO of Terra’s parent company.
The Office of the Basic State Prosecutor may shortly file criminal allegations against Kwon along with Joon for utilizing fraudulent travel papers from Costa Rica, which they claim were first uncovered by Interpol, according to a March 23 report in the Montenegrin daily Pobjeda. A search of their luggage also turned up three laptops and five mobile phones that had been taken from them, according to Pobjeda.
The crime is thought to come according to Montenegro’s Criminal Code, Article 412, Paragraph 2, which brings a three-year maximum sentence for incarceration.
Kwon was placed under arrest on September 14 by South Korean authorities after he was charged with numerous fraud offenses and breaking his state’s capital markets laws. Additionally, on February 16 the United States Securities Exchange Commission filed its own fraud charges, and on September 26 Interpol published a red alert listing him for arrest.
For his alleged role in the demise of the $40 billion Terra Luna Classic (LUNC) token and TerraClassicUSD stablecoin in the month of May, accusations have been filed against him.
