Hyung Do Kwon walked into a Manhattan courtroom on Thursday, calm and collected, as if the $40 billion collapse of Terraform Labs wasn’t sitting on his shoulders. His plea? “Not guilty.”
But The U.S. government isn’t playing games. A new indictment filed just before his court appearance added a money laundering charge to an already quite long list. Securities fraud, commodities fraud, wire fraud—you name it, it’s in there.
Federal prosecutors claim Kwon ran Terraform Labs like a smoke-and-mirrors show, feeding investors a steady diet of lies while moving over $10,000 in what they call “criminally derived property” through crypto and wire transfers.
A $40 billion illusion
The story prosecutors are painting isn’t pretty. They say Terraform’s products didn’t work as advertised. Instead, they were allegedly tweaked behind the scenes to create the illusion of a decentralized financial system.
Authorities in South Korea accused Kwon of fraud and capital markets violations, but the man was nowhere to be found. That kicked off an international manhunt, ending in Montenegro in March 2023, where he was caught trying to board a flight to the UAE with a fake Costa Rican passport.
Fast forward to December 2024, and Montenegro handed Kwon over to U.S. officials. The transfer went down at the Podgorica airport, and FBI agents wasted no time bringing him stateside. South Korea had also requested his extradition, but the U.S. won the tug-of-war.
In court, Kwon pleaded not guilty. His attorneys have stayed tight-lipped so far, but they’ve got their work cut out for them. The government is armed with years of alleged false disclosures, misleading social media posts, and evidence of shady financial transactions. Why does Kwon even bother?
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