Terraform Labs co-founder Do Kwon will face securities fraud charges in the US

Terraforms Labs CEO Do Kwon spent the last day of 2024 getting extradited to the US, Reuters reports. Kwon faces charges in the US for “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.” The Terraforms co-founder has been held in Montenegro since March 2023, when he tried to board a flight with a forged passport — six months after Interpol put out a “red notice” warrant for his arrest.

South Korean-based Terraforms Labs wiped out $40 billion from the crypto market when its TerraUSD and Luna stable coins turned out to not be so stable and collapsed in May 2022. Kwon had already fled South Korea the month before.

The US announced its charges in February 2023, with the SEC chair Gary Gensler stating, “We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for Luna and TerraUSD. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.” South Korea has issued similar charges.

Montenegro doesn’t have extradition treaties with the US or South Korea. The request played out in court over the last year and a half, with Montenegro’s Justice Minister Bojan Bozovic ordering Kwon’s extradition last week. Terraform Labs filed for Chapter 11 bankruptcy protection in the US last January.