Terraform Labs co-founder Do Kwon pleaded not guilty in a New York court, according to news reports, shortly after being extradited to the United States from Montenegro.
Kwon appeared on Thursday in a Manhattan court to enter his plea and is next set to appear in court on Jan. 8, according to Reuters. Inner City Press reported that Kwon entered the court wearing a "grey/green sweater" and smiled alongside his lawyers.
"Do Kwon is chatting with one of his lawyers, smiling - apparently in good spirits," Inner City Press said in a post on X.
Kwon was criminally charged with conspiracy to defraud, commodities fraud, wire fraud, securities fraud, conspiracy to defraud and engaging in market manipulation and money laundering conspiracy. The charges are linked to Kwon's role with algorithmic stablecoin Terra USD (UST), which collapsed dramatically in 2022, wiping out billions of dollars. Algorithmic stablecoins use market incentives via algorithms to maintain a stable price. Terra was linked to Luna, a governance token, to keep the prices stable.
Montenegro extradited Kwon earlier this week following months of debate on whether the former executive should face courts in South Korea or the U.S.
U.S. prosecutors say Kwon built a "financial world" on "lies and manipulative and deceptive techniques used to mislead investors, users, business partners, and government regulators," in a filing posted on Thursday.
"Behind the scenes, core Terraform products did not work as Kwon advertised, and were manipulated to create the illusion of a functioning and decentralized financial system in order to lure investors," prosecutors said.
Kwon also faced civil charges in a case brought by the U.S. Securities and Exchange Commission in February 2023. The trial for Terraform against the SEC started in late March, though without Kwon. In April, a jury found that both Terraform and Kwon misled investors and were found liable for civil fraud. The main issues that the jury had to delve into revolved around the SEC's claims that Kwon and Terraform violated federal securities laws by engaging in fraud connected to the buying and selling of Terraform securities.
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