Federal prosecutors in Manhattan on Thursday unsealed a nine-count indictment charging Kwon, who co-founded Singapore-based Terraform Labs and developed the TerraUSD and Luna currencies, with securities fraud, wire fraud, commodities fraud and money laundering conspiracy.
The judge ordered Kwon detained after Chesley said he would not seek bail at this time. Kwon took a copy of the 79-page indictment with him as U.S. marshals led him out of the courtroom. He is expected back in court on Jan. 8.
In Thursday’s indictment, the Manhattan U.S. Attorney’s office alleged Kwon misled investors in 2021 about TerraUSD, a so-called stablecoin designed to maintain a value of $1.
Prosecutors said that false claim and others drove retail and institutional investors to buy Terraform products and boost the value of Luna, a more traditional token developed by Kwon that fluctuated in value but was closely linked to TerraUSD, to $50 billion by the spring of 2022.
When TerraUSD’s value began sliding again in May 2022, the trading firm warned that propping it up “wasn’t so simple this time,“ according to the indictment.
Jump did not immediately respond to requests for comment.
In a trial on the SEC claims, a federal jury in Manhattan found Kwon and Terraform liable last April for defrauding cryptocurrency investors. Terraform’s lawyer had said in closing arguments that the company and Kwon had been truthful about their products and how they worked, even when they failed. Kwon did not attend that trial because he had been detained in Montenegro since March 2023 on forgery charges. He was handed over to U.S. law enforcement officers on Tuesday at an airport in Podgorica, the capital of Montenegro.
Kwon is one of several cryptocurrency moguls to face federal charges after a slump in digital token prices in 2022 prompted the collapse of a number of companies.
Alex Mashinsky, the founder and former CEO of cryptocurrency lender Celsius Network, pleaded guilty last month to two counts of fraud.
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