Fraud in the crypto industry seems to be a recurring theme as another player is charged with fraud. Do Kwon, known as the founder of Terraform Labs and who created the Terra stablecoin, is reportedly arrested for eight counts of fraud.
Another Fraudster in the Crypto World
Federal prosecutors from the Southern District of New York charged the Terraform Labs founder, who amassed over $40 million dollars with the scheme. The charges include wire fraud, commodities fraud, conspiracy to defraud and engage in market manipulation.
Montenegro law enforcement has arrested Do Kwon. Filip Adzic, the Montenegro Minister of the Interior confirmed it through Twitter and Facebook. However, the source that confirmed this may not be a reliable source, according to The Verge.
Do Kwon was said to be apprehended for using a forged Costa Rican travel document, which was detected in a passport check as he attempted to board a flight to Dubai. The former CEO was charged hours after the arrest of Montenegro authorities.
Reports say that South Korean national police are waiting for a fingerprint confirmation to determine whether the individual arrested by Montenegro police really is Do Kwon. Prosecutors also plan on extraditing the CEO and founder of the crypto exchange.
There was already an arrest warrant issued for Do Kwon before federal prosecutors in the US filed the charges. Interpol had also issued a "red notice" back in September, which was requested by South Koreans, according to The New York Times.
Kwon tweeted in regard to the arrest warrant issued by his native country, saying that he wasn't "on the run" or anything of the sort. However, his actions show otherwise, which prosecutors pointed out and said that he was "obviously on the run."
With two countries looking to settle the legal predicament Do Kwon is in, it's unknown where the alleged fraudster would face his charges. Regardless, both scenarios are not looking good for the creator of the Terra and Luna crypto tokens.
Terraform Labs and Its Founder
Terraform was founded back in 2018 by Do Kwon, who is a former Apple and Google Engineer from Standford University. This spawned the TerraUSD stablecoin or USD, which Kwon meant to maintain at the value of 1 USD by using Luna.
People were enticed by the future of TerraUSD and Luna, which led to the rise of the latter to almost $120 per token in March 2022. Although, things started to fall apart by May of the same year, and depositors lost confidence, according to Corporate Finance Institute.
The stablecoin and token were at their lowest by May 16th, 2022, and the exchange was being accused of running a Ponzi scheme. This resulted in $400 billion worth of losses in the cryptocurrency markets.
Do Kwon tried to rebuild by launching Terra 2.0 in late May 2022 without links to the algorithmic stablecoin, reports say. The original blockchain was now called Terra Classic, with the original Luna token also renamed Luna Classic (LUNC).
