Do Kwon, the co-founder of Terraform Labs, has pleaded not guilty to United States fraud charges related to the $40 billion Terra LUNA crash in 2022. Only two days ago, the Montenegro authorities extradited him to the U.S.

According to a Bloomberg report, the troubled co-founder faces nine financial-related charges, including money laundering conspiracy, commodities fraud, wire, and securities.

Do Kwon Pleads Not Guilty

The U.S. Magistrate Judge Robert Lehrburger presided over the court hearing, which was publicized on January 2nd. Although pleading not guilty through his lawyer, the South Korean fugitive agreed to be detained. Whether the court will consider Kwon’s plea deal or progress to a criminal trial remains uncertain.

Notably, the U.S. Attorney’s office in Manhattan, which will prosecute the troubled Terraform Labs co-founder, was also behind the prosecution of FTX co-founder Sam Bankman-Fried (SBF) last year. SBF, on his part, is currently serving a 25-year jail term over the cataclysmic FTX crash in late 2022.

As of March 2023, Kwon faced eight counts of financial-linked violations. However, U.S. Attorney Damian Williams stated in a court document that the Terraform Labs’ executive conspired with several entities to commit money laundering. As a result, Kwon currently faces nine charges, considerably higher than SBF’s seven counts.

A Two-Year-Old Case

Kwon’s legal troubles date back to May 2022, when Terraform Labs’ flagship products, TerraUST and Terra LUNA, crashed. It caused a $40 billion meltdown in the crypto market, triggering a chain of events that led to FTX’s crash later that year.

Kwon has been on the run ever since. Last year, Montenegro authorities apprehended the Terraform Labs co-founder while he was trying to take a flight to Dubai using a fake passport. He spent four months in prison for using a false ID in the country.

Around the same time, authorities in South Korea and the U.S. requested Kwon’s extradition. Both countries got into a back-and-forth extradition battle over Kwon. Eventually, the Montenegro government disclosed in late December 2024 that the troubled crypto figure had been extradited to the U.S. to face fraud charges.