DO HYEONG KWON, the co-founder and former CEO of Terraform Labs PTE, Ltd., has entered a guilty plea in federal court for his role in a colossal cryptocurrency fraud. United States Attorney Jay Clayton announced today that Kwon faces charges for conspiring to commit commodities fraud, securities fraud, and wire fraud, as well as committing wire fraud in relation to fraudulent schemes at Terraform.
In a scheme that leveraged the allure of cryptocurrencies, Kwon promoted Terraform as a self-contained financial system using blockchain technology. However, it was revealed that the core suite of Terraform products did not function as advertised and were manipulated to deceive investors into believing they were part of a decentralized financial world.
“Do Kwon used the technological promise and investment euphoria around cryptocurrency to commit one of the largest frauds in history,” said U.S. Attorney Jay Clayton. The collapse of Terraform’s ecosystem resulted in billions in losses for investors worldwide.
Terraform introduced several applications, including Chai payment platform, Mirror Protocol for synthetic financial assets trading, Anchor Protocol for borrowing and lending, and Luna Foundation Guard Ltd., which aimed to support the stability of TerraUSD (UST). Kwon solicited investments from various firms by promising a stablecoin that maintained value despite market changes.
The Terraform scandal has highlighted the need for integrity and accountability in the digital asset markets. The investigation was made possible through the dedicated efforts of law enforcement partners at the FBI and international allies.
According to the Superseding Indictment, Terraform’s stablecoin UST was claimed to be exchangeable for a dollar worth of LUNA, Terra’s native token. This promise proved false, leading to the collapse of Terraform’s ecosystem and the loss of investor funds.
Related Federal Cases
Key Facts
- State: New York
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes|Cybercrime|White Collar Crime
- Source: Official Source ↗
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