Terraform's CEO Do Kwon Pleads Not Guilty to Charges of Falsifying Travel Documents

On Thursday, Terraform Labs co-founder Do Kwon pleaded not guilty to a charge of forging his passport and travel documents in a Montenegrin court. This hearing comes a month after Kwon and Chang-joon Han, Kwon’s former colleague who also pleaded not guilty, were arrested at the airport in Podgorica, the capital of Montenegro, while trying to fly to Dubai.

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Background on Terraform Labs’ Collapse

The collapse of Terraform Labs’ stablecoin TerraUSD (UST) and its sister coin Luna is a significant event that wiped out approximately $40 billion in market value, collapsing an array of crypto firms. This event occurred on May 7, 2022. Since then, Kwon has been under investigation in the U.S. and South Korea.

Timeline of Events

May 2022

Terraform Labs’ stablecoin Terra, which was supposed to maintain a 1:1 peg to the U.S. dollar, crashed on May 7, 2022.
A group of crypto investors in South Korea filed a lawsuit against Kwon.

June 2022

South Korea launched investigations into Terraform Labs.
Seoul prosecutors blocked 15 former employees of Terraform from leaving South Korea while they investigated the company.

July 2022

Do Kwon was arrested at his home in Singapore for allegedly violating court orders to freeze his assets.
The U.S. Department of Justice charged Do Kwon and his co-founder, Daniel Shin, with wire fraud and conspiracy charges related to the collapse of Terraform Labs’ stablecoins.

August 2022

South Korea’s financial regulator, the Financial Supervisory Service (FSS), suspended the licenses of Terraform Labs and its subsidiary, Terraform Partners.
The FSS also froze assets worth around $5.4 billion belonging to Do Kwon and his associates.

September 2022

Do Kwon was charged with wire fraud and conspiracy by the U.S. Department of Justice.
He was arrested in Montenegro while trying to leave for Dubai.

Current Developments

This week, South Korea froze about $176 million of Do Kwon’s assets and properties, including his house, cars, and financial assets such as securities, bank deposits, and cryptocurrencies on cryptocurrency exchanges. The Seoul prosecutor’s office confirmed this development to TechCrunch.

What’s Next?

The investigation into Terraform Labs’ collapse is ongoing in South Korea, the U.S., and other countries. Do Kwon’s next court appearance is scheduled for May 26, when his first trial will be held on charges including violations of capital markets law in South Korea, fraud, and embezzlement.