Crypto Mogul Do Kwon Pleads Not Guilty in First US Court Appearance

South Korean cryptocurrency mogul Do Kwon pleaded not guilty on Thursday 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 the man 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 cofounded.

Authorities say investors worldwide were harmed by the $40 billion crash of Terraform Labs’ cryptocurrency. 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.



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. "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," it added.

The collapse of the TerraUSD coin unleashed an unprecedented crash in crypto markets and sparked a South Korean investigation into Kwon. He was previously charged with fraud and breaches of capital markets law in his home country, prompting an international manhunt after authorities were unable to locate him. Kwon was ultimately arrested in Montenegro in 2023, after he was discovered trying to travel to the United Arab Emirates, which does not have an extradition treaty with the US, while using a forged Costa Rican passport. US criminal charges against him were unsealed hours later. Montenegro extradited Kwon to US officials and FBI agents on Tuesday in an airport near the Balkan country’s capital.

The indictment against Kwon is the latest development in a high-profile case that has captivated the crypto world and raised questions about the regulation and security of stablecoins. As the legal process unfolds, investors and industry observers will be watching closely to see how the case impacts the broader crypto market and the perception of decentralized finance (DeFi) platforms. The outcome of Kwon's trial could have significant implications for investor confidence in stablecoins and the crypto industry as a whole.