U.S. authorities have filed fraud charges against Do Kwon, the cryptocurrency inventor responsible for two digital currencies that suffered losses of at least $40 billion last year.
Some hours after the news of Kwon’s arrest earlier on Thursday in Montenegro broke, an eight-count indictment against him was made public in the U.S. District Court in Manhattan.
After business hours, demands for comments were not immediately answered by Kwon’s US attorneys.
Kwon, a South Korean national who co-founded Terraform Labs and created the TerraUSD and Luna currencies, is accused of two counts each of conspiracy, wire fraud, commodities fraud, and securities fraud in the indictment released on Thursday.
Following similar civil allegations filed against Kwon and Terraform by the US Securities and Exchange Commission last month, a criminal prosecution has been opened.
After Kwon had been missing for a while, South Korean officials filed an arrest order for him in September of last year.
According to the interior ministry of Montenegro, as they were attempting to board an aircraft to Dubai at the Podgorica airport, local police seized two suspects, one of whom is believed to be Kwon.
During the interaction, police discovered fake Costa Rican and Belgian passports, the ministry said.
Interior Minister Filip Adzic said on Twitter that the individual is “suspected to be one of the most sought fugitives,” South Korean citizen Do Kwon, the co-founder and CEO of Singapore-based Terraform Laboratories.
Adzic said, “The former cryptocurrency king, who is responsible for losses of almost $40 billion, was detained at the Podgorica airport using fraudulent papers.”
Although Luna’s value varied, TerraUSD was a so-called “stablecoin” that was intended to keep its price fixed at $1.
Nevertheless, according to experts, TerraUSD and Luna are coupled, so a fall in one might bring the other to a halt.
Also, they said Kwon misrepresented TerraUSD’s stability, which was formerly among the top 10 cryptocurrencies in terms of market value.
In May, both currencies saw price collapses, with TerraUSD’s value falling to less than one cent.
The SEC charged Kwon and Terraform with “orchestrating a multi-billion dollar crypto asset securities scam” in its civil action.
In a statement at the time, SEC Chair Gary Gensler said, “We also claim that they committed fraud by repeatedly making false and deceptive promises to establish trust before inflicting catastrophic losses on investors.”
