On the 23rd (local time), US prosecutors indicted Kwon Do-hyeong (31), CEO of Terraform Labs, the issuer of cryptocurrency Terra USD (UST) and Luna, on eight charges, including investor deception and market manipulation.
According to the New York Times (NYT) on the same day, the Montenegrin Ministry of Interior announced that Kwon and his party were arrested for using Costa Rican travel documents during passport control while boarding a plane to Dubai. Immediately after the arrest, the Southern District Attorney’s Office (SDNY) indicted Kwon on eight charges, including investor deception, financial fraud using internet banking, market manipulation, product fraud, and securities fraud.
The Korean police checked the 10 fingerprints provided by Montenegro around 8:00 am on the 24th and confirmed that they were CEO Kwon and former CEO of CHAI Corporation Chang-Jun Han.
Previously, the Korean prosecutors (Seoul Southern District Prosecutor’s Office Financial and Securities Law Crimes Unit) have been investigating Kwon on charges of violating the Capital Markets Act since September of last year. The prosecution has invalidated Kwon’s passport and issued a red wanted notice from the International Criminal Police Organization (Interpol).
Prosecutors plan to negotiate with the Montenegrin authorities on the extradition process to secure the new recruits.
In February, the U.S. Securities and Exchange Commission (SEC) also filed a fraudulent lawsuit against the key suspects, CEO Do-hyung Kwon and Terraform Labs, in the Manhattan District Court.
The SEC charged Kwon and Terraform Labs with violating the Securities Management Act, saying they misled investors about the risks of Terra USD, a so-called stablecoin designed to maintain a price of $1.
In the complaint, the SEC said that CEO Kwon withdrew more than 100 million dollars (about 130 billion won) from the Swiss bank in question since June of last year. A loss has occurred.”
CEO Kwon has been promoting that Terra can maintain the value of one dollar thanks to an algorithm linked to sister coin Luna. However, in early May of last year, when the pegged (fixed) system became unstable, such as the price of Terra falling below $1, the price of Luna plummeted, and most of its market capitalization evaporated within a week.
Meanwhile, on the 13th, the Wall Street Journal (WSJ) hinted at the possibility of the U.S. prosecutors suspending the investigation without indictment.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.