Do Kwon faces fraud charges from US prosecutors hours after arrest

Terraform Labs CEO Do Kwon has been charged with fraud by United States prosecutors in New York, just hours after he was reportedly arrested in Montenegro.

In a court filing signed by United States Attorney Damian Williams, the 31-year-old entrepreneur has been charged with eight separate counts, including commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation.

Under the first charge, conspiracy to defraud, the U.S. prosecutors claim to have jurisdiction over Kwon because he made a series of false and misleading statements during a TV interview that was transmitted to — among other places — the Southern District of New York, about the extent to which the Terra blockchain had been adopted by users.

The second, third and fourth charges of commodities, securities and wire fraud were laid for similar reasons.

Charges five through to eight, conspiracy to defraud and engage in market manipulation, commodities, securities and wire fraud related to a series of misleading statements about the effectiveness of the TerraClassicUSD stablecoin (USTC) that purportedly ensured the 1:1 pegging with the U.S. dollar (USD), in addition to Kwon’s involvement in a series of trading strategies that were designed to alter the market price of USTC.

translation:

ONE OF THE WORLD’S MOST WANTED FUGITIVES WAS ARRESTED IN PODGORICA

Montenegrin police have detained a person suspected of being one of the most wanted fugitives, South Korean citizen Do Kwon, co-founder and CEO of Singapore-based Terraform Labs.

— vedbajoria (@VedBajoria) March 23, 2023

The filing comes as Filip Adzic, the minister of interior of Montenegro, reported on March 23 that an individual suspected of being the former “cryptocurrency king” was detained at the Podgorica airport with “falsified documents.”

The suspect, believed to be Kwon, was detained in Podgorica Airport with fellow business partner Hon Chang Joon while trying to fly to Dubai, Adzic stated.

In a follow-up tweet, the Montenegro Interior Ministry reported that Kwon used forged travel documents from Costa Rica.

Criminal charges in Montenegro

According to a report by Montenegro-based newspaper Pobjeda on March 23, the Basic State Prosecution Office may soon press criminal charges against Kwon and Joon for using forged travel documents from Costa Rica, which they say was first discovered by Interpol.

The criminal offense is understood to fall under Article 412 paragraph 2 of the Criminal Code of Montenegro, which carries a maximum imprisonment sentence of three years.

A luggage search also found forged Belgium travel documents along with three laptops and five mobile phones, which were taken from them, Pobjeda reported.

Related: Terra co-founder Do Kwon says he’s not ‘on the run’

South Korean prosecutors issued an arrest warrant against Kwon on Sept. 14, who faces a series of fraud charges and breaches of capital markets law in his home state. Also, Interpol on Sept. 26 issued a red notice listing for his arrest, and the United States Securities Exchange Commission filed fraud charges of its own on Feb. 16.

The charges laid against him are in relation to his alleged role in the collapse of the $40 billion Terra Luna Classic (LUNC) token and TerraClassicUSD stablecoin (USTC) last May.

Since the collapse, Kwon has reportedly moved between Singapore, Dubai and Serbia.

The South Korean foreign ministry officially canceled Kwon’s passport on Oct. 20 after he failed to surrender his passport following an October 6 order.

Magazine: SEC sues Do Kwon, Paxos ready to litigate, SBF’s VPN: Hodler’s Digest, Feb. 12-18