Latest news with #TerraformLabs
Coin Geek
3 days ago
- Business
- Coin Geek
Terraform founder Do Kwon pleads guilty to two fraud charges
Getting your Trinity Audio player ready... Terraform Labs co-founder and former CEO Do Kwon, facing federal charges in the United States over his part in the 2022 collapse of the Terra ecosystem, has changed his plea from not guilty to guilty on two counts of wire fraud and conspiracy to defraud. According to a report on August 12 from Inner City Press—which was at the hearing in U.S. District Court for the Southern District of New York—Kwon pleaded guilty and waived his right to go to trial on two of the nine charges he has been facing from the U.S. government since January 2023. Reuters first broke the news on Monday that the 33-year-old co-founder of Singapore-based Terraform Labs was expected to enter a change of plea, having initially pleaded not guilty in January to the nine-count indictment charging him with conspiracy to commit commodities fraud, securities fraud, wire fraud, conspiracy to defraud investors, and engaging in market manipulation. Judge Paul Engelmayer will now decide Kwon's fate, with a sentencing hearing scheduled for December 11. The disgraced Terraform co-founder faces up to 25 years in prison, but as part of the plea agreement, it was reported that prosecutors would recommend no more than 12 years; the plea agreement with prosecutors would also reportedly impose $19 million in financial penalties on Kwon. The move almost brings to a close the long-running U.S. criminal case started in 2022 after the collapse of algorithmic stablecoin TerraUSD (UST) and the subsequent catastrophic impact it had on the digital asset space as a whole, resulting in billions of dollars' worth of losses. Kwon's fellow Terraform Labs co-founder, Daniel Shin, is still facing trial in a South Korean court for his part in the scandal. Terra fiasco The saga of Terraform Labs' collapse began in May 2022 when UST lost its peg to the U.S. dollar, leading to printing more of the company's native token, LUNA, to prop up UST. This led to a crash in LUNA, and the whole Terra ecosystem came tumbling down, with an estimated $60 billion being wiped out of the digital asset space. Authorities in Kwon's native South Korea promptly issued an arrest warrant for the co-founder in September of that year for violating capital market rules. He responded by seemingly fleeing to Montenegro—although he denies this interpretation of his actions. In March 2023, police in Montenegro arrested Kwon as he attempted to board a flight to Dubai, with South Korean police confirming his identity shortly after. A few short hours after Kwon's arrest in Montenegro, U.S. federal prosecutors in New York filed the nine charges against him. A back-and-forth between South Korea, the U.S., and Montenegrin authorities ensued over who should get the chance to put Kwon on trial, with the U.S. eventually coming out on top. The disgraced Terraform co-founder was finally extradited to the United States in December 2024. Civil case Kwon's woes didn't begin and end with the criminal charges; he also faced a civil suit from the U.S. Securities and Exchange Commission (SEC). The regulator sued Terraform and Kwon in February 2023, accusing them of orchestrating a 'fraudulent scheme' and violating securities laws by selling unregistered securities. The Terraform v. SEC trial kicked off in March 2024, despite Kwon's absence, and by April, the jury had found that both Terraform and Kwon misled investors and were liable for civil fraud. 'We are pleased with today's jury verdict holding Terraform Labs and Do Kwon liable for a massive crypto fraud,' said the SEC, in response to the decision. 'Terraform Labs and Kwon, its former CEO, deceived investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD, and they further misled investors about whether a popular payment application used Terraform's blockchain to process and settle payments.' The verdict was followed by a filing from Terraform's legal team suggesting that the court impose a maximum $1 million civil penalty, arguing that the SEC had 'failed to prove that it is entitled to the expansive injunction and monetary sanctions it seeks,' and that the proposed fines would have to be obtained from the Luna Foundation Guard (LFG)—a 'non-party' in the civil case—and therefore the court 'should not grant any injunctive relief or disgorgement.' However, on June 12, 2024, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York delivered his final judgment on the case, ordering that Terraform was liable for total remedies of just over $4.47 billion. Of this amount, Kwon was personally held liable for just over $204 million. On top of this hefty bill, Kwon can now add the $19 million in financial penalties he has agreed to pay federal prosecutors. The Terraform co-founder will have to wait until December to find out how many years of his life he will also have to pay for. Watch: Teranode is the digital backbone of Bitcoin title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
Yahoo
4 days ago
- Business
- Yahoo
Former Terraform CEO pleads guilty to fraud in massive crypto scheme
Aug. 13 (UPI) -- Former crypto CEO Do Kwon pleaded guilty to federal charges related to financial fraud that cost victims billions of dollars. The co-founder and former CEO of the defunct Terraform Labs blockchain and cryptocurrency company, Kwon pleaded guilty Tuesday to one count of conspiring to commit commodities fraud, securities fraud, and wire fraud, as well as one count of committing wire fraud in connection to his admitted deceitful actions at Terraform. "Do Kwon used the technological promise and investment euphoria around cryptocurrency to commit one of the largest frauds in history," said U.S. Attorney Jay Clayton in a press release. According to the U.S. Attorney's Office of the Southern District of New York, Terraform, under Kwon, offered a unique blockchain that issued stablecoins under a distinct protocol that it falsely claimed would maintain a fixed value even when market conditions would fluctuate. Kwon sought and acquired agreements from several investment firms around the world to buy or lend Terraform's cryptocurrencies built on the Terraform blockchain. Terraform's stablecoin UST was attached to the U.S. dollar, and under claims that one UST coin could always be exchanged for $1 of its blockchain's native LUNA token, the market value of all UST and LUNA had surpassed $50 billion by the spring of 2022. It turned out that a great deal of that financial growth was due to falsifications about Terraform and its technology by Kwon, which led to UST and LUNA suffering a collapse of value that caused investors to suffer than $40 billion in losses. Kwon then covered up his criminal acts by distributing a false audit. He then fled to Europe and spent 18 months on the run while traveling on a false passport before being arrested in March of 2023 in Europe and then extradited in January to the United States from Montenegro to the United States. Kwon, who will be sentenced in December, has agreed to surrender more than $19 million in proceeds from his criminal gains as part of a plea deal which also includes that prosecutors not seek a sentence longer than 12 years.
UPI
4 days ago
- Business
- UPI
Former Terraform CEO pleads guilty to fraud in massive crypto scheme
Do Kwon, the co-founder and CEO of the now-defunct Terraform Labs blockchain and cryptocurrency company, is seen here in custody in Podgorica, Montenegro, in March of 2024. File Photo by Boris Pejovic/EPA-EFE Aug. 13 (UPI) -- Former crypto CEO Do Kwon pleaded guilty to federal charges related to financial fraud that cost victims billions of dollars. The co-founder and former CEO of the defunct Terraform Labs blockchain and cryptocurrency company, Kwon pleaded guilty Tuesday to one count of conspiring to commit commodities fraud, securities fraud, and wire fraud, as well as one count of committing wire fraud in connection to his admitted deceitful actions at Terraform. "Do Kwon used the technological promise and investment euphoria around cryptocurrency to commit one of the largest frauds in history," said U.S. Attorney Jay Clayton in a press release. According to the U.S. Attorney's Office of the Southern District of New York, Terraform, under Kwon, offered a unique blockchain that issued stablecoins under a distinct protocol that it falsely claimed would maintain a fixed value even when market conditions would fluctuate. Kwon sought and acquired agreements from several investment firms around the world to buy or lend Terraform's cryptocurrencies built on the Terraform blockchain. Terraform's stablecoin UST was attached to the U.S. dollar, and under claims that one UST coin could always be exchanged for $1 of its blockchain's native LUNA token, the market value of all UST and LUNA had surpassed $50 billion by the spring of 2022. It turned out that a great deal of that financial growth was due to falsifications about Terraform and its technology by Kwon, which led to UST and LUNA suffering a collapse of value that caused investors to suffer than $40 billion in losses. Kwon then covered up his criminal acts by distributing a false audit. He then fled to Europe and spent 18 months on the run while traveling on a false passport before being arrested in March of 2023 in Europe and then extradited in January to the United States from Montenegro to the United States. Kwon, who will be sentenced in December, has agreed to surrender more than $19 million in proceeds from his criminal gains as part of a plea deal which also includes that prosecutors not seek a sentence longer than 12 years.
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First Post
4 days ago
- Business
- First Post
Do Kwon, the man behind $40 bn cryptocrash, pleads guilty to fraud
Kwon, 33, co-founded Terraform Labs in Singapore and built the TerraUSD and Luna tokens, a pairing that once carried a market value north of $50 billion Do Kwon, the South Korean cryptocurrency entrepreneur whose stablecoin empire imploded in 2022, pleaded guilty Tuesday (August 12) to two US counts of conspiracy to defraud and wire fraud. Kwon, 33, co-founded Terraform Labs in Singapore and built the TerraUSD and Luna tokens, a pairing that once carried a market value north of $50 billion. At a hearing in Manhattan federal court, he admitted lying to investors about how his supposedly stable digital dollar kept its $1 peg. STORY CONTINUES BELOW THIS AD 'I made false and misleading statements about why it regained its peg by failing to disclose a trading firm's role in restoring that peg,' Kwon told Judge Paul Engelmayer. 'What I did was wrong.' More from Tech Perplexity offers $34.5bn for Google's Chrome in bid to challenge search dominance The plea deal with the US attorney's office drops other charges, including securities fraud and money laundering conspiracy, from a nine-count indictment. Prosecutors will recommend no more than 12 years in prison if Kwon accepts full responsibility. Sentencing is set for December 11. He faces a statutory maximum of 25 years. Back in 2021, when TerraUSD slipped off its peg, Kwon told the world a computer algorithm had fixed it. In reality, prosecutors say, he orchestrated a secret rescue by a high-frequency trading firm that bought millions of dollars' worth of the token. The false narrative, they allege, lured more investors into Terraform's products and sent Luna soaring before the crash wiped out roughly $40 billion. Manhattan US Attorney Jay Clayton called it 'one of the largest frauds in history,' driven by the hype of blockchain technology and speculative mania. Kwon has been in custody since his extradition from Montenegro last year. He also faces criminal charges in South Korea. The plea agreement allows him to seek transfer abroad after serving half his US sentence, if prosecutors do not object. STORY CONTINUES BELOW THIS AD In a separate case, he and Terraform agreed in 2024 to pay $80 million in civil penalties and accept a ban from crypto transactions as part of a $4.55 billion settlement with the U.S. Securities and Exchange Commission. The 2022 crypto crash swept away several high-profile firms. Kwon's fall from a darling of the blockchain scene to a jailed defendant stands as one of its most spectacular collapses. With inputs from Reuters
Saudi Gazette
4 days ago
- Business
- Saudi Gazette
'Cryptocrash king' Do Kwon pleads guilty to fraud
NEW YORK — A South Korean former tech executive accused of helping to spark a cryptocurrency crisis that cost investors more than $40bn (£31.8bn) has pleaded guilty to two criminal counts of fraud. Do Kwon was the boss of Singapore-based Terraform Labs, which operated two cryptocurrencies - TerraUSD and Luna - both of which collapsed in 2022, triggering a wider sell-off in the crypto market. The US says he was responsible for the failure of the two digital currencies, accusing him of "orchestrating a multi-billion dollar crypto asset securities fraud". As part of the plea deal, prosecutors have agreed to refrain from seeking a sentence longer than 12 years. Kwon is due to be sentenced on 11 December. Kwon's guilty plea "underscores the importance of accountability in the digital asset sector," said Todd Snyder, who was appointed by US authorities and Terraform Labs to oversee the company's liquidation. He added that those who contributed to the collapse of Terraform Labs will be held to account by the firm and that assets will be recovered in the best interests of claimants. Kwon's guilty plea in a New York court comes after a lengthy legal battle. He initially fled South Korea after a warrant for his arrest was issued in 2023, eventually ending up in Montenegro where he was arrested and jailed before being extradited to the US. US prosecutors said Kwon misrepresented features that were supposed to keep the so-called stablecoin at $1 without outside intervention. They alleged that in 2021, Kwon arranged for a trading firm to surreptitiously purchase millions of dollars worth of the token to restore TerraUSD's value, even as he told investors that a computer algorithm called Terra Protocol was responsible. Prosecutors say the alleged misrepresentation prompted a wide array of investors to buy Terraform's offerings, which helped prop up the value of the company's Luna token, which was closely linked to TerraUSD. The following year, Kwon's TerraUSD and the Luna cryptocurrency crashed. "In 2021, I made false and misleading statements about why [TerraUSD] regained its peg," he said in court on Tuesday. "What I did was wrong and I want to apologise for my conduct," he added. Kwon had originally pleaded not guilty to nine counts stemming from the crash, including securities and wire fraud, and money laundering conspiracy. He had faced up to 135 years in prison if convicted of the charges in the original indictment. As part of his plea deal, Kwon agreed to refrain from challenging the allegations in the indictment. He must also forfeit up to $19.3m plus interest and several properties and pay restitution. While prosecutors have agreed to limit their requested sentence to 12 years, Judge Paul Engelmayer maintained that he was entitled to prescribe a longer sentence. That sentence could be up to 25 years in prison. He still faces charges in South Korea, according to his attorney. — BBC
