Terraform boss makes confession to US prosecutors
Do Kwon, the boss of cryptocurrency company Terraform Labs, made a confession in a US court on Thursday after being extradited to the US from Montenegro. Kwon allegedly misled investors about the true value of Terraform’s cryptocurrencies TerraUSD and Luna. The problems surrounding TerraUSD were the prelude to the crypto winter of 2022. Do Kwon denies guilt.
The case revolves around the Terra Protocol, a computer algorithm that would ensure that the value of Terra’s stablecoins would remain stable. The stablecoins became important tools for investors in transactions.
In fact, Kwon allegedly secretly invested millions of dollars through a trading company to artificially increase the value of the currency. Private and institutional investors were also encouraged with targeted advertisements to invest in Terraform’s cryptocurrencies.
In May 2022, Terra’s value fell again and Kwon’s trading company warned that it would no longer be so easy to support the currency. TerraUSD and Luna subsequently crashed, dragging other crypto currencies down with them. Bitcoin also sustained damage.
In June 2024, Kwon accepted an $80 million civil penalty while promising not to conduct any more crypto transactions. Both pledges were part of a $4.55 billion settlement Kwon and Terraform had reached with the stock market watchdog SEC.
Kwon has filed a confession through his lawyer in Manhattan federal court. The former Terraform boss was subsequently remanded in custody.
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