Do Kwon, the South Korean entrepreneur behind the infamous collapse of the TerraUSD and Luna cryptocurrencies, has pleaded not guilty to criminal fraud charges in the U.S. courtroom following his recent extradition from Montenegro.

Kwon, who co-founded Terraform Labs, appeared in Manhattan federal court to face a nine-count indictment unveiled by federal prosecutors. The charges include securities fraud, wire fraud, commodities fraud, and money laundering conspiracy (Reuters). Throughout the proceedings, Kwon maintained his innocence regarding claims that he misled investors about the stability and operations of the two digital currencies.

Having experienced an estimated $40 billion loss in 2022, the crash of TerraUSD, a so-called stablecoin, and Luna generated substantial repercussions throughout the cryptocurrency market. Kwon's activities reportedly misled investors into believing that a computer algorithm known as the "Terra Protocol" had the capacity to maintain the token's value, while in fact, he is alleged to have orchestrated transactions to prop up its price artificially (SCMP).

During the court hearing presided over by U.S. Magistrate Judge Robert Lehrburger, Kwon's lawyer stated that they would not seek bail, resulting in Kwon being detained pending further hearings. He is expected to return to court on January 8, 2025.

In a civil case last April, a jury found both Kwon and Terraform liable for defrauding investors, aggravating his legal troubles. Kwon had previously settled with the U.S. Securities and Exchange Commission (SEC) by agreeing to pay an $80 million fine and relinquish his rights to participate in cryptocurrency transactions as part of a $4.55 billion settlement.

The fallout from the collapse of TerraUSD and Luna not only harmed investors but also severely affected broader cryptocurrency market valuations, including Bitcoin. Notable figures, such as Sam Bankman-Fried, who previously faced charges related to the FTX exchange, further exemplify the regulatory scrutiny surrounding the cryptocurrency sector.

Kwon, now aged 33, has found himself among several high-profile crypto moguls being held accountable as the industry faces increasing regulatory pressure. Terraform Labs has been in a state of bankruptcy since last January.

For further information, please visit SCMP and Reuters.