Terraform Labs Founder Do Kwon Faces Fraud Charges in New York Following Arrest in Montenegro

cryptonews.com:

Terraform Labs founder and crypto fugitive Do Kwon has been charged with eight counts of fraud in New York after his arrest in Montenegro.

The indictment, which was made public in the U.S. District Court in Manhattan on Thursday, charges Kwon with two counts each of securities fraud, wire fraud, commodities fraud, and conspiracy, according to a report by Reuters. 

US prosecutors detailed that Kwon made a series of false and misleading statements during a TV interview about the extent to which the Terra blockchain had been adopted by users.

The disgraced crypto boss also made a series of purportedly misleading statements about the effectiveness of the TerraClassicUSD stablecoin to keep its peg with the US dollar, as well as Kwon’s alleged involvement in trading strategies that were designed to alter the market price of assets.

The new indictment comes as the Securities and Exchange Commission charged Terraform Labs and Kwon with defrauding US investors in mid-February. 

The complaint by the SEC accused Terraform Labs and Kwon of orchestrating a multibillion-dollar cryptocurrency fraud.

The commission said that Terraform and Kwon raised billions of dollars from investors during the period between 2018 to May 2022 by selling “crypto asset securities” in the form of synthetic assets or “mAssets,” algorithmic stablecoin Terra USD (UST), and its sister cryptocurrency LUNA.

Specifically, the lawsuit claimed that Terraform and Kwon misled investors about the stability of UST while it was using a flawed model all along.

The agency also claimed that Kwon transferred more than 10,000 Bitcoin from the Luna Foundation Guard (LFG) reserves to a cold wallet - and has been cashing out via a Swiss financial institution. 

Montenegro's Minister of