Do Kwon pleads not guilty to charges following $40 billion Terra USD Collapse 

Kwon, known for creating the TerraUSD stablecoin and another cryptocurrency that collectively lost an estimated $40 billion, faces charges including securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering.

The hearing, held in Manhattan federal court yesterday, followed Kwon’s extradition from Montenegro last week. U.S. Magistrate Judge Robert Lehrburger ordered Kwon to remain in custody after his attorney, Andrew Chesley, stated that his client would not seek bail at this time.

As U.S. Marshals escorted Kwon out of the courtroom, he carried a copy of the 79-page indictment detailing the charges against him.

In a separate legal battle, Kwon agreed in June 2023 to pay an $80 million civil fine and accept a ban on cryptocurrency transactions. This settlement was part of a $4.55 billion agreement between Kwon, Terraform Labs, and the U.S. Securities and Exchange Commission (SEC).

Kwon’s case echoes the legal troubles of Binance founder Changpeng Zhao, who recently paid a $50 million personal fine alongside his company’s $4 billion settlement with U.S. regulators. Kwon now joins the ranks of high-profile Asian crypto executives facing significant legal and financial consequences.

Prosecutors in the Manhattan U.S. Attorney’s Office unveiled details of Kwon’s alleged deceptive practices that misled investors and resulted in substantial losses.

The collapse of TerraUSD and its sister token in May 2022 resulted in losses totaling $40 billion. The crash had a cascading effect, pulling down the value of other cryptocurrencies, including Bitcoin.

While the prosecutors did not name the trading firm involved in the alleged manipulation, Reuters reported that SEC lawyers suspect it was Jump Trading that collaborated with Kwon to prop up TerraUSD in 2021. Jump Trading has neither confirmed nor denied the allegations.

The case against Do Kwon sheds light on the risks and complexities of the cryptocurrency market, as regulators and law enforcement continue to crack down on fraudulent activities within the industry.