Entries related to Do Kwon

June 12, 2024

Terraform Labs, Do Kwon reach $4.5 billion settlement with the SEC

Terraform Labs and its former CEO Do Kwon have agreed to settle the SEC's civil action against them with a $4.5 billion payment of disgorgement, interest, and penalties. Kwon and the company were behind the collapsed Terra/Luna stablecoin project, which imploded in May 2022. It was among the first dominoes in what ended up being an industry-wide collapse.

If the settlement is approved by the judge, Kwon will personally be responsible for around $200 million of the settlement payment, with Terraform Labs shouldering the rest. Although the settlement is among the largest the SEC has received in a securities fraud lawsuit, it's unlikely the company will ever pay anything close to the total amount, as it is in bankruptcy and claims to have only around $150 million in assets remaining. Both the company and Kwon will be banned from trading crypto asset securities.

The substantial fine is among the lesser of Kwon's worries at the moment, as he is still in jail in Montenegro pending extradition to either South Korea or the United States to face serious criminal charges for his role in the fraud.

"Do Kwon's Crypto Firm Agrees to Pay $4.5 Billion Penalty to SEC", Wall Street Journal [archive]

April 5, 2024

Do Kwon and Terraform Labs found liable for $40 billion fraud

Do Kwon (attribution)

After hearing arguments that Terraform Labs was "built on lies" during a two-week-long trial, the jury in the civil case against the company and its founder Do Kwon found that both were liable for fraud.

Kwon and his company were behind the algorithmic stablecoin, Terra, which dramatically collapsed in May 2022, sending huge ripple effects throughout the ecosystem. He and his company had lied about the stability of the token, ultimately causing massive financial damage to the tune of around $40 billion.

Kwon is in custody in Montenegro after attempting to flee criminal cases in both the United States and South Korea. The civil case in the US proceeded without him.

"Terraform Labs and founder Do Kwon found liable in US civil fraud trial", Reuters [archive]
Verdict in Securities and Exchange Commission v. Terraform Labs Pte Ltd. [archive]

December 7, 2023

Do Kwon reportedly to be extradited to the United States

(attribution)

Do Kwon, founder of the collapsed Terra/Luna project, will be extradited from Montenegro to the United States once he's completed his four-month-long jail sentence for document forgery, says the Wall Street Journal. Although a Montenegrin court had already approved his extradition, it left the decision of whether to send him to South Korea or the United States up to Justice Minister Andrej Milovic. Milovic has reportedly privately said he intends to send Kwon to the US.

Kwon filed a last-ditch appeal of the extradition decision on December 6. A decision is scheduled on the matter by December 15. Milovic is unlikely to publicly announce Kwon's extradition destination until then.

Both South Korea and the United States have sought Kwon's extradition on criminal charges related to the Terra/Luna scheme. Federal prosecutors in the Southern District of New York indicted Kwon on eight fraud and market manipulation charges in March 2023. He and his company also face a civil lawsuit from the Securities and Exchange Commission.

"Exclusive: Montenegro Plans to Extradite Fallen Crypto Tycoon Do Kwon to U.S.", The Wall Street Journal [archive]

March 23, 2023

US prosecutors file criminal charges against Do Kwon

Do Kwon (attribution)

Only hours after Do Kwon was arrested in Montenegro, federal prosecutors in New York filed eight criminal charges against him: conspiracy to defraud, conspiracy to defraud and engage in market manipulation, and two counts each of commodities fraud, securities fraud, and wire fraud. Prosecutors accuse Kwon of defrauding people by selling LUNA and UST (Terra) based on false claims about the technology, degree of adoption, and effectiveness of the algorithm intended to maintain Terra's stability.

The criminal charges out of the US add to civil charges he's facing from the SEC, as well as an investigation out of South Korea.

March 23, 2023

Terra/Luna founder Do Kwon arrested

Do Kwon (attribution)

The founder of Terra/Luna, the stablecoin that crashed dramatically in May 2022 and has subsequently been alleged to be a massive fraud, has been arrested in Montenegro.

After the collapse, Kwon became a fugitive. South Korea issued a warrant for his arrest in September, and Interpol issued a red notice. However, he's remained on the lam for some time, reportedly hiding in Serbia for a time — a country with no extradition agreement with South Korea.

Now, officials in Montenegro have announced they arrested Do Kwon, who was attempting to travel through the country using falsified documents. Montenegro is a Balkan country bordering Serbia.

"Do Kwon Arrested in Montenegro: Interior Minister", CoinDesk

February 16, 2023

SEC files fraud charges against fugitive Terra/Luna CEO, Do Kwon

Do Kwon (attribution)

The U.S. Securities and Exchange Commission filed charges against Terraform Labs and its CEO, Do Kwon, relating to the May 2022 collapse of the Terra/Luna projects. The complaint accuses Terraform and Kwon of offering unregistered securities and of fraud, and the SEC wrote in a press release that Kwon and the company "orchestrat[ed] a multi-billion dollar crypto asset securities fraud".

According to the SEC, Kwon "repeatedly misled and deceived investors" about the characteristics and stability of Terra and Luna, and tricked investors into believing that a popular Korean mobile payments platform used the Terra blockchain.

Kwon has been on the run from the law since Korean authorities filed a warrant for his arrest in September 2022. An Interpol red notice followed soon after. He is reportedly hiding out in Serbia, and Korean authorities reportedly traveled there in early February to hunt for him.

"SEC Charges Terraform and CEO Do Kwon with Defrauding Investors in Crypto Schemes", United States Securities and Exchange Commission

October 5, 2022

South Korea reportedly freezes $39.6 million in crypto belonging to Terra founder Do Kwon, Kwon says it isn't his

South Korean prosecutors have reportedly frozen $39.6 million in crypto assets belonging to Do Kwon, the founder of Terraform Labs and creator of the failed Terra blockchain project. South Korea had also previously issued a warrant for his arrest.

Kwon claims that the report is a "falsehood", and "I don't know whose funds they've frozen". This joins his other claims, such as that he is "not 'on the run' or anything similar" (he is), and that Interpol didn't issue a red notice for him (they have).

"Terraform Labs founder Do Kwon refutes reports about his funds getting frozen", TechCrunch

September 14, 2022

South Korea issues arrest warrant for Terra founder Do Kwon

Do Kwon (attribution)

A South Korean court has issued a warrant for the arrest of Do Kwon, the founder of the Terra ecosystem, as well as five other people. According to Bloomberg the allegations include violations of Korea's capital markets law.

Kwon and the others named in the warrant are currently in Singapore. In June, Korea banned current and former Terraform Labs employees from leaving the country, and in July Korean authorities raided multiple exchanges in connection to their investigation.

July 20, 2022

Korean authorities raid seven cryptocurrency exchanges in relation to Terra investigation

Korean police cars parked outside an office building at nighttime. A lit "Upbit" sign is visible.

Korean police executing one of the raids (attribution)

Prosecutors working on the fraud case around the May Terra/Luna collapse raided seven cryptocurrency exchanges in South Korea including Bithumb, Upbit, and Coinone. They also raided eight other offices and residences in connection to the investigation. The investigators are reportedly looking for evidence to determine whether Terra founder and CEO Do Kwon may have intentionally spurred the collapse of the ecosystem.

"Prosecutors Raid 7 Korean Exchanges Amid Terra Probe: Report", CoinDesk

May 25, 2022

Terra decides to release "Terra 2.0", because apparently the way to fix a crypto catastrophe is with more crypto

(attribution)

Following the dramatic collapse of Terra earlier this month, the Terra ecosystem voted to pass a proposal by Do Kwon to create "Terra 2.0". The project intends to "effectively create a new Terra chain without the algorithmic stablecoin" — an odd choice given that the whole point of the original Terra was the stablecoin. The proposal also involves renaming the existing Luna ($LUNA) coin to "Luna Classic" ($LUNC), so that Luna 2.0 can take its place — a change that I'm sure will not cause any confusion whatsoever.

Billy Markus, one of the original creators of the Dogecoin cryptocurrency (both of whom have since left the project), tweeted, "luna 2.0 will show the world just how truly dumb crypto gamblers really are".

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