South Korean entrepreneur Do Kwon, extradited from Montenegro on Tuesday, was presented to a federal judge in New York on Thursday January 2. He was charged with fraud in the management of the Terra cryptocurrency, which collapsed in the spring of 2022, and pleaded not guilty. Implicated in the United States and the subject of an arrest warrant issued by the South Korean authorities, Do Kwon had spent almost a year on the run before his arrest, in March 2023, at the airport from Podgorica (Montenegro).
Launched in 2020, Terra, also called TerraUSD or UST, was presented as a stablecointhat is to say a digital currency whose price was theoretically pegged to a classic currency, in this case the dollar. But unlike other electronic currencies of this type, such as Tether or USDC, the proceeds from the sale of Terra were not placed in safe assets, such as cash (a currency like the dollar for example ) or government bonds, likely to be recovered quickly in the event of a problem.
More than 40 billion dollars evaporated
Terraform Labs, the company founded by Do Kwon, actually based the value of Terra on an algorithm. However, in the spring of 2022, after the collapse of the other cryptocurrency created by Terraform Labs, Luna, Terra was the subject of massive sales by investors who had become suspicious. The value of Terra then fell below one dollar, which pushed Terraform Labs to use almost all of its reserves to support its two cryptoassets, to no avail.
In total, their collapse reduced the value of the holdings of Terra and Luna by more than $40 billion (39 billion euros), according to the charging document from the office of Manhattan federal prosecutor Edward Kim, published THURSDAY. Nine charges, punishable by 130 years in prison, were brought against the 33-year-old accused, including those of fraud and criminal conspiracy.
The fall of Terra and Luna triggered an earthquake in the world of cryptocurrencies, which ended up taking with them several players in the sector, including the second largest global exchange platform, FTX, in November 2022. Washington obtained the extradition of Do Kwon to the United States rather than to South Korea, where he is also wanted.
