• Terraform Labs co-founder Do Kwon pleaded not guilty to allegedly using false passports from Belgium and Costa Rica on Thursday in a Montenegro court.
• Search warrants for his arrest were issued in South Korea in September and Kwon was subsequently arrested in March.
• The US Securities and Exchange Commission charged Terraform Labs and Kwon in February for defrauding investors.
Terraform Labs CEO Do Kwon Pleads Not Guilty
Terraform Labs co-founder Do Kwon pleaded not guilty to charges of alleged passport forgery during a court hearing on Thursday, according to Bloomberg News. Defense lawyer Branko Andjelic proposed freeing him on bail of 400,000 euros, but the prosecutor objected citing that both parties had financial means to flee the country if necessary. If convicted, he could face up to five years in prison under Montenegrin law.
Search Warrants Issued For Arrest
Search warrants were issued by South Korean authorities in September 2020 after it became apparent that TerraUSD, an algorithmic stablecoin launched by Terraform Labs before crashing last year, had collapsed leading to billions of dollars being lost as a result. Han Chang-joon, the company’s former chief financial officer was also accused of forgery at the same time with both being arrested together during March 2021.
SEC Charges Terraform Labs & Do Kwon
The US Securities and Exchange Commission (SEC) filed charges against both Terraform Labs and Do Kwon this past February accusing them of defrauding investors through repeatedly claiming that their tokens would increase in value when they knew otherwise. The complaint further discussed other activities such as how TerraUSD had dropped below its $1 peg back in May 2021 before being “secretly discussed” with a third party who then purchased massive amounts of it thus restoring its value which was publicly touted as “a triumph of decentralization” without disclosing the real reason behind its restoration – the purchase from another party.
Extradition Requested By US & South Korea
Both the United States and South Korea have requested extradition requests for Do Kwan and Han Chang-joon which will be decided upon by local judges within Montenegro who are set to decide whether they should be freed or not on bail conditions set forth by defense lawyer Branko Andjelic who proposed each paying 400,000 euros respectively while prosecutors strongly opposed citing that they have financial means which allows them to flee if need be.
Algorithmic Stablecoin – TerraUSD
TerraUSD is an algorithmic stablecoin that uses market incentives through algorithms so maintain a stable price paired with Luna – its governance token which fell along with it when it crashed last year causing billions of dollars being wiped out as a result.