DIGIVESTASI - Federal prosecutors in Manhattan on Thursday (January 2, 2025) revealed charges against Do Kwon, the founder of Singapore-based Terraform Labs, related to nine allegations, including securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering. Kwon, who developed the TerraUSD and Luna cryptocurrencies, is facing a number of serious violations.

During the hearing, the judge ordered Kwon's detention after his lawyer stated that he would not seek bail at that time. Kwon was seen carrying a 79-page copy of the indictment as he was escorted out by law enforcement officers. He is scheduled to return to court on January 8, 2025.

Back in June, Kwon had agreed to pay a civil fine of USD 80 million and a ban on cryptocurrency transactions as part of a settlement with the U.S. Securities and Exchange Commission (SEC) worth USD 4.55 billion related to Terraform Labs.

In the indictment read on Thursday, the U.S. Attorney's Office in Manhattan accused Kwon of misleading investors in 2021 about TerraUSD, which was marketed as a stablecoin designed to maintain a value of USD 1.

Kwon is alleged to have told investors that the "Terra Protocol" algorithm could restore the value of TerraUSD when the coin dropped below its peg in May 2021, while in reality, he had orchestrated the purchase of millions of dollars' worth of tokens by high-frequency trading firms to artificially support the price.