Kwon Pleads Not Guilty to US Charges in Terra LUNA, UST Crash

Crypto fraudster Do Kwon has pleaded not guilty in a New York court to US criminal charges related to the collapse of the Terra crypto ecosystem in 2022, following his extradition from Montenegro earlier this week.

The feds indicted the 33-year-old disgraced tech entrepreneur on nine felony charges, including securities fraud, securities fraud and money laundering. He agreed on Thursday to stand trial before U.S. Magistrate Judge Robert Lehrberger, the Inner City Press reported.

Kwon co-founded Terra, a once large crypto ecosystem with apps built around the LUNA token and the TerraUSD (UST) algorithmic stable coin. The project was popular with investors, and quickly became the second largest blockchain after Ethereum by early 2022.

Its native cryptocurrency, LUNA, was in its prime as one of the top digital assets by market cap. Kwon made a lot of money, very quickly, and even mocked “poor” people on X (formerly known as Twitter).

But Terra collapsed in May 2022, taking $40 billion of investors' money with it. The crash led to a brutal bear market, as many crypto projects with exposure to the project later declared bankruptcy.

The project's main product, the UST stablecoin, couldn't keep its stable peg to the dollar, resulting in the entire ecosystem collapsing and losing nearly all of its value in a matter of days.

Authorities in both the U.S. and South Korea now allege that the entrepreneur was a scammer who conned investors into buying his cryptocurrency.

“Behind the scenes, core Terraform products did not work as Kwon advertised, and were manipulated to create the illusion of a functioning and decentralized financial system in order to lure investors,” Thursday's indictment reads.

Kwon was arrested in Montenegro last year for allegedly attempting to travel on a fake passport. His lawyers kept him in the country until Tuesday, when he was finally extradited to the United States.

Edited by Andrew Hayward