Do Kwon, the CEO of Terraform Labs
Loses a civil lawsuit filed by the SEC
High possibility of extradition to the U.S.
On the 5th, a Manhattan jury found that Terraform Labs and its co-founder Do Kwon were responsible for the civil fraud charges filed by the U.S. Securities and Exchange Commission (SEC).
Previously, the SEC filed a civil lawsuit in 2021 alleging that Terraform Labs had deceived investors about the stability of Terra and caused losses close to $40 billion (approximately 54 trillion KRW).
The jury sided with the SEC, ruling that Kwon had intentionally deceived investors.
The verdict revealed that Terraform Labs and Do Kwon misled investors regarding the stability of the algorithmic stablecoin UST. The court also confirmed the false claim that Chai, a Korean payment system, had utilized their technology.
Gurbir Grewal, the executive director of the SEC, emphasized the significant losses investors suffered due to Terra’s deception. He urged cryptocurrency companies to prioritize regulatory compliance and investor protection.
However, Terraform Labs responded, “We do not believe the evidence supports this,” and expressed disappointment in the verdict.
Meanwhile, this verdict is separate from the criminal trial. New York prosecutors are indicting Kwon on securities fraud, commodity fraud, and conspiracy to manipulate prices.
He has been in custody since his arrest in Montenegro, a Balkan Peninsula country in Eastern Europe, in March of last year. He was apprehended at Podgorica airport while trying to depart for Dubai in the United Arab Emirates using a forged Costa Rican passport.
Following Kwon’s arrest, South Korea and the vied for extradition fordition. Initially slated for extradition to the U.S., Kwon’s fate shifted due to the appellate court’s intervention. The appellate court ultimately ruled in favor of extradition to South Korea.
However, the possibility of Kwon’s extradition to the U.S. increased after the local Supreme Court invalidated his extradition to South Korea.
The jurisdiction’s minister should make the decision on extradition approval and priority, and Justice Minister Andrej Milovich has repeatedly expressed his desire for Kwon’s extradition to the U.S.
In an interview with a local broadcaster last year, he stated that “the U.S. is our most important foreign policy partner” regarding Kwon’s extradition. It was revealed that he had told the U.S. ambassador to Montenegro that he planned to send Kwon to the U.S.
In fact, the U.S. is known to impose heavy sentences for economic crimes.
In the past, Bernard Madoff, the former chairman of the NASDAQ stock exchange, defrauded about 40,000 investors of $65 billion and was sentenced to 150 years in prison. Allen Stanford, the former chairman of Stanford International Group, was charged with financial fraud of $7 billion and sentenced to 110 years in prison.
A senior researcher at the Korean Criminal Policy Research Institute also predicted Kwon’s punishment to be 100 years in prison based on these cases.
In addition, it was proven that Kwon had forged passports from two countries and falsely claimed to have lost all his assets, while he possessed around 200 billion KRW in Bitcoin and other assets stored in a Swiss bank. This revelation is anticipated to impact his sentencing.
Most Commented