South Korean Cryptocurrency Mogul Pleads Not Guilty to Fraud Charges

What to Know

• South Korean cryptocurrency mogul Do Hyeong Kwon pleaded not guilty to a freshly unsealed indictment released in time for his first U.S. court appearance.
• Kwon entered the plea in Manhattan federal court two days after his extradition from Montenegro.
• The indictment alleges that Kwon lied to investors from 2018 to 2022 to fool them into pouring money into Terraform Labs, the Singapore crypto firm he co-founded.

Do Hyeong Kwon, the South Korean cryptocurrency mogul, has pleaded not guilty to a freshly unsealed indictment released in time for his first U.S. court appearance. Kwon entered the plea in Manhattan federal court two days after his extradition from Montenegro.

The Allegations

The indictment alleges that Kwon, dubbed by some as "the cryptocurrency king," lied to investors from 2018 to 2022 to fool them into pouring money into Terraform Labs, the Singapore crypto firm he co-founded. Authorities say investors worldwide were harmed by the $40 billion crash of Terraform Labs’ cryptocurrency.

The Collapse of Terraform Labs

The May 2022 collapse came despite the company’s claim that TerraUSD was a "stablecoin" that could be relied upon. Kwon did not speak during his court appearance, except to acknowledge that he understood English. His lawyer, Andrew Chesley, entered not guilty pleas to two separate versions of the indictment charging him with conspiracy, along with commodities, securities, and wire fraud. A money laundering charge was added Thursday.

Conspiracy and Deception

The superseding indictment accused Kwon of deceiving investors by telling them that Terraform had developed novel reliable financial technologies enabling it to turn blockchain technology into a self-contained decentralized financial world with its own money, payment system, stock market, and savings bank. "In fact," the indictment said, "Kwon’s constructed financial world was built on lies and manipulative and deceptive techniques used to mislead investors, users, business partners, and government regulators" about Terraform’s business.

Conclusion

Do Hyeong Kwon’s plea of not guilty marks the beginning of his legal battle in the United States. The case is a major blow to the cryptocurrency industry, which has been plagued by allegations of fraud and deception.

FAQs

What is the case about?

The case is about Do Hyeong Kwon, a South Korean cryptocurrency mogul, who has been accused of defrauding investors by lying to them about his company, Terraform Labs.

What are the allegations?

The allegations are that Kwon lied to investors from 2018 to 2022 to fool them into pouring money into Terraform Labs, and that he used manipulative and deceptive techniques to mislead investors, users, business partners, and government regulators.

What is the outcome of the case so far?

Kwon has pleaded not guilty to the charges, and his lawyers have entered not guilty pleas to the indictment. He is currently being held in a federal jail pending further proceedings.