Posted on: January 03, 2025 03:35 PM

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Do Kwon extradited to the United States from Montenegro to face charges relating to fraud resulting in USD40 billion in losses

Attorney for the United States Daniel M. Gitner said: “A federal grand jury has indicted Do Kwon for misleading his investors in order to fraudulently inflate the value of Terraform’s cryptocurrencies, and laundering the proceeds of his crimes. As we allege, this fraud and the crash of Terraform’s cryptocurrencies in May 2022 erased over $40 billion in investor assets, causing devastating losses to countless investors in the United States and around the world. Kwon will now face justice in a federal courtroom in Manhattan.”

Attorney General Merrick B. Garland said: “Do Hyeong Kwon will now be held accountable in an American courtroom for, as alleged in court documents, his elaborate schemes involving Terraform’s cryptocurrencies, which resulted in over $40 billion in investor losses.  We secured this extradition despite Kwon’s alleged attempt to cover his tracks by laundering proceeds of his schemes and trying to use a fraudulent passport to travel to a country that did not have an extradition treaty with the U.S.  This extradition from Montenegro is an example of the Justice Department’s international partnerships, which enable the pursuit of criminals wherever they attempt to hide.”

FBI Assistant Director in Charge James E. Dennehy said: “Do Kwon, co-founder and former CEO of Terraform, allegedly defrauded investors by falsely advertising the company's blockchain products as decentralized, reliable, and effective, and by engaging in market manipulation, ultimately resulting in more than $40 billion in investor losses. For at least four years, Kwon allegedly played puppet master to maintain this crafted illusion and ensnare investors. The FBI will tirelessly work to apprehend any individual who engages in fraudulent financial practices, even those who flee internationally to escape prosecution.”

As alleged in the Superseding Indictment unsealed today in Manhattan federal court:[1]

From at least in or about 2018, up to and including in or about 2022, KWON orchestrated schemes to defraud purchasers of Terraform cryptocurrencies.  Among other things, KWON made false and misleading claims regarding the stability and efficacy of Terraform’s cryptocurrency stablecoin protocol, its use of blockchain technology, and its development of functioning and reliable financial technologies.

As KWON knew, however, core Terraform products did not work as KWON had claimed. Rather, KWON manipulated Terraform products to create the illusion of a functioning, stable, and decentralized financial system. KWON’s conduct inflated the value of Terraform’s cryptocurrencies, which KWON and entities he controlled possessed in large amounts and sold to investors in exchange for billions of dollars’ worth of other assets.

From DOJ