Terraform’s Do Kwon pleads not guilty to false travel documents

Do Kwon, co-founder of Terraform Labs, pleaded not guilty in a Montenegrin court on Thursday on charges of forging his passport and travel documents.

Kwon’s hearing comes a month after Kwon and Chang-joon Han, Kwon’s former colleague, who also pleaded not guilty, were arrested at the airport in Podgorica, the capital of Montenegro, while trying to fly to Dubai. Their lawyer requested bail conditions of €400,000 ($437,000) each and suggested house arrest in Montenegro. The next court hearing is scheduled for June 16.

On May 7, 2022, Terraform Labs’ stablecoin TerraUSD (UST), an algorithmic stablecoin that worked with its sister coin, Luna, lost his $1 pin. The event wiped out approximately $40 billion in market value, causing a series of crypto companies to collapse.

A year after the crash, Kwon is now in prison in Montenegro and under investigation in the US and South Korea. If Kwon is convicted of forging his documents, he will may have to serve his prison sentence in Montenegro before being extradited to the US or South Korea, the Montenegrin Justice Ministry said in March.

In memory of what happened to Terraform and founder Kwon over the past 12 months, we present the disaster in slow motion as it unfolded for the now five-year-old company, that launched its TerraUSD stablecoin and Luna in 2019 and then moved its headquarters to Singapore in 2020:

May 2022

  • Terraforms Labs’ stablecoin Terra, which is supposed to maintain a 1:1 peg to the US dollar, crashed on May 7, 2022.
  • A group of crypto investors in South Korea filed a lawsuit against Kwon. (May 19, 2022)

June 2022

September 2022

October 2022

  • The South Korean government ordered to destroy Kwon’s passport, increasing pressure on the crypto entrepreneur to return to his country. (October 5, 2022)
  • said Kwon that South Korean prosecutors’ charges against him were not legitimate and were politically motivated. (October 18, 2022)

December 2022

February 2023

March 2023

April 2023

  • This was reported by a local media on April 13 that Kwon sent about 9 billion won (~$7 million) to Kim & Chang, a law firm in South Korea, before the collapse of Terra and Luna. This suggests that Kwon knew about the crisis and expected a lawsuit.
  • A judge in the US denied that Kwon and Terraform call saying they have asked the Securities and Exchanges Commission (SEC) to withdraw the Monetary Authority of Singapore’s request for access to documents related to Terraform and Luna Foundation Guard (LFG). (Apr 18, 2023)
  • Terraforms co-founder Shin was sued in connection with the crash of TerraUSD and Luna on charges including violations of South Korea’s capital markets laws, fraud and embezzlement. South Korean prosecutors are freezing assets tied to the people worth about 246.8 billion won ($184.7 million). A spokesman for the Korean prosecutors confirmed to MinRegion that Shin’s first trial will take place on May 26.

May 2023

  • Sung-han Dan, director of the joint South Korean prosecutors’ financial crimes team said in an interview with The WSJ“The investigation of the case in South Korea would be the most efficient way to bring justice,” as most of the key accomplices and evidence related to the Terraform incidents are in South Korea.
  • This week, South Korea froze about 233.3 billion won ($176 million) in Kwon’s assets and properties, the Seoul prosecutor’s office confirmed to MinRegion. A South Korean court has banned the sale of Kwon’s house, cars and financial assets such as securities, bank deposits and cryptocurrencies on cryptocurrency exchanges.

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