By Luc Cohen
NEW YORK (Reuters) – Do Kwon, the South Korean cryptocurrency entrepreneur behind two digital currencies that lost an estimated $40 billion in 2022, was set to appear in U.S. court on Thursday to face criminal fraud charges after being extradited from Montenegro this week.
Federal prosecutors in Manhattan in March 2023 charged Kwon, who co-founded Terraform Labs and developed the TerraUSD and Luna currencies, with two counts each of securities fraud, wire fraud, commodities fraud and conspiracy.
Kwon has denied wrongdoing. He agreed last June to pay an $80 million civil fine and be banned from crypto transactions as part of a $4.55 billion settlement that he and Terraform reached with the U.S. Securities and Exchange Commission.
He is due to appear at 12:30 p.m. EST (1730 GMT) before U.S. Magistrate Judge Robert Lehrburger in Manhattan federal court.
Last April, a federal jury in Manhattan found Kwon and Terraform liable in a civil trial for defrauding cryptocurrency investors.
A lawyer for Terraform said in closing arguments that Terraform and Kwon had been truthful about their products and how they worked, even when they failed.
Kwon did not attend that trial because he had been detained in Montenegro since March 2023. Terraform declared bankruptcy last January.
The SEC and the Manhattan U.S. Attorney’s office allege Kwon misled investors in 2021 about the stability of TerraUSD, a so-called stablecoin designed to maintain a value of $1.
Kwon also developed Luna, a more traditional token that fluctuated in value but was closely linked to TerraUSD.
The collapse of TerraUSD and Luna in 2022 dragged down the value of other cryptocurrencies, including bitcoin, and caused wider havoc in the crypto market.
Kwon, 33, is one of several cryptocurrency moguls to face federal charges after a slump in digital token prices in 2022 prompted the collapse of a number of companies in the space.
Sam Bankman-Fried, who founded the exchange FTX, is appealing his conviction and 25-year sentence last March for stealing $8 billion from customers.
Alex Mashinsky, the founder and former CEO of cryptocurrency lender Celsius Network, pleaded guilty last month to two counts of fraud.
(Reporting by Luc Cohen in New York; Editing by Kevin Liffey)
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