Crypto entrepreneur Do Kwon charged with fraud in the US

Do Kwon, a prominent crypto entrepreneur behind two digital currencies that crashed last year, was charged with fraud by US prosecutors late Thursday, shortly after local authorities arrested him in Montenegro.

The arrest, confirmed by local authorities, ended a months-long search for the crypto entrepreneur, who once had a devoted fan base but lost the faith of many investors after last year’s crypto meltdown.

Authorities had believed that Kwon, the South Korean developer of the TerraUSD and Luna cryptocurrencies, went into hiding after his home country issued an arrest warrant for him in September. At the time, Kwon denied he was on the run in a tweet. But since then, his once-active Twitter account has gone silent.

Montenegro’s interior ministry said Thursday it “apprehended” Kwon and brought him and a South Korean national to a prosecutor’s office in the capital on charges of document forgery. South Korea had reportedly asked Interpol to issue a “red notice”, allowing other countries to preliminarily arrest Kwon.

Later in the day, prosecutors in the Southern District of New York announced an eight-count indictment against Kwon related to his cryptocurrency business. The indictment charged him with various forms of fraud – including securities fraud, commodity fraud and conspiracy to defraud and engage in market manipulation.

Kwon’s arrest comes as much of the cryptocurrency market remains exposed. The boom began fizzing last spring when Luna crashed, sparking wider turmoil in the crypto market that saw other firms collapse. The so-called “crypto winter” deepened in November when FTX, a crypto exchange, went bankrupt and its founder, Sam Bankman-Fried, was later charged with fraud.

Since then, other firms and crypto boosters have faced regulatory pressure, including crypto exchange Kraken, which in February agreed to stop selling certain assets and pay a $30 million settlement with the Securities and Exchange Commission. Just a day before Kwon’s arrest, the SEC filed a complaint against eight celebrities, including professional boxer Jake Paul and actress Lindsay Lohan, accusing them of failing to disclose their compensation for the promotions.

Both Terra and Luna took off among crypto enthusiasts and multiplied in value before finally crashing last year. Investors have said Kwon defrauded them to market the coins.

Before the crash, Kwon was well-regarded, with his fans calling themselves “maniacs” after his token. He graduated from Stanford University and briefly worked for Apple before founding several crypto projects, including Luna.

Kwon’s case has been closely watched as governments around the world consider how to prosecute cases involving cryptocurrency and how aggressively to pursue the founders behind the coins. Among them is FTX founder Bankman-Fried, who is under house arrest pending a series of civil and criminal charges against him by government agencies.