Do Kwon, co-founder of Terraform Labs, appeared before a US judge on January 2, 2025, where he pleaded not guilty to fraud and money laundering charges. This hearing marks a key step in a case that has shaken the crypto world since the collapse of the Terra ecosystem.
Do Kwon pleads not guilty in US court
Do Kwon, a central figure in the Terra Luna case, appeared before Judge Robert Lehrburger in the Southern District of New York.
This first hearing follows his arrest in Montenegro in 2023, where the authorities arrested him in 2023 for using false travel documents. The charges against him include nine counts, including securities fraud, wire fraud and money laundering.
U.S. Attorney Damian Williams released a indictment replacement at that hearing, adding a charge of money laundering conspiracy. According to the charges, Kwon orchestrated suspicious transactions exceeding $10,000, knowing they came from illegal activity. In response, Do Kwon pleaded not guilty and agreed to be held without bail.
Defense attorneys and prosecutors will meet on January 8, 2025 for a status conference. During this session, they will exchange their evidence and establish the road map towards a potential trial. The matter could be complex, combining financial and technological issues on a global scale.
A legal saga with multiple ramifications
Do Kwon's extradition to the United States was authorized by Montenegrin authorities after months of debate. The Minister of Justice of Montenegro, Bojan Božović, considered the seriousness of the charges and the priority of the United States in its extradition request. This decision reflects an international desire to strengthen cooperation against financial crimes in the crypto sector.
Kwon's case is reminiscent of that of Sam Bankman-Fried (SBF), former CEO of FTX, who also faced similar accusations. However, the defense strategies differ: Kwon could opt for a trial, unlike Changpeng Zhao (Binance), who chose to plead guilty in 2024.
Furthermore, Terraform Labs had already agreed, in June 2024, to settle a lawsuit with the Securities and Exchange Commission (SEC) by paying $4.47 billion. This agreement, although important, did not prevent the criminal prosecution of Do Kwon.
In sum, the outcome of this case will determine whether Do Kwon follows the path of a plea deal or engages in a full criminal trial, with major implications for the future of the crypto industry. For the moment, Do Kwon remains in detention, and his trial promises to be a crucial step in the evolution of the regulation of the crypto market.
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