Do Kwon Found Guilty of Fraud in SEC Case

A jury in the Southern District of New York found Terraform Labs (TFL) and its co-founder Do Kwon guilty of deceiving investors and securities fraud.

“We are pleased with today’s jury verdict, which holds TFL and Do Kwon accountable for orchestrating a massive cryptocurrency fraud. [They] misled investors about the stability and security of crypto-assets and the so-called algorithmic stablecoin TerraUSD,” said SEC SEC enforcement director Gurbir Grewal.

According to him, the defendants caused enormous harm to investors, wiping out tens of billions “virtually overnight.”

“We are very disappointed with the verdict, which we believe is not supported by the evidence. We continue to assert that the SEC lacks the authority to bring this case, and we are carefully considering our options and next steps,” a TFL representative told CoinDesk.

The trial lasted nine days and was held in absentia. The SEC charged TFL and Do Kwon with orchestrating a multibillion-dollar securities fraud in February 2023.

On March 23, 2023, Montenegrin police arrested Kwon and former TFL CFO Han Chang-Joon as they attempted to fly from Podgorica airport to Dubai using fake passports. The latter was extradited to Korea in February 2024.

In his home country, Kwon faces numerous charges, including violations of capital markets law. In the United States, his case is being handled by the Federal Prosecutor’s Office in New York.

Back in March, it was reported that the TFL co-founder would be released from prison after serving his sentence for attempting to cross the border with forged documents.

In April, Montenegro’s Supreme Court overturned Do Kwon’s extradition, as the decision on permission and the order of extradition in this case is made by the Minister of Justice. The case will return to the High Court of Podgorica for review.