Crypto founder Do Kwon indicted in US hours after Montenegro arrest

Do Kwon, the cryptocurrency entrepreneur behind two digital currencies that lost an estimated $40 billion or more last year, has been indicted by U.S. Attorneys for fraud.

The eight-count indictment against Kwon was announced in U.S. District Court in Manhattan several hours after learning of his arrest earlier Thursday in Montenegro.

Kwon’s attorneys in the United States did not immediately respond to requests for comment after hours.

Thursday’s indictment charges Kwon, a South Korean national who co-founded Terraform Labs and developed the TerraUSD and Luna currencies, with two counts of securities fraud, bank fraud, commodity fraud and conspiracy.

The criminal case follows related civil charges filed by the U.S. Securities and Exchange Commission against Kwon and Terraform last month.

Kwon had been on the run for several months, and South Korean authorities issued an arrest warrant for him last September.

According to the Montenegrin Ministry of Interior, local police arrested a person suspected to be Kwon and another suspect who were trying to board a flight to Dubai at Podgorica airport.

During the encounter, the police found fake passports from Costa Rica and Belgium, the ministry said.

“The person is suspected to be one of the most wanted fugitives, South Korean citizen Do Kwon, who is the founder and CEO of Singapore-based Terraform Labs,” Interior Minister Filip Adzic wrote on Twitter.

“The former cryptocurrency king, behind more than $40 billion in losses, has been caught at Podgorica airport with forged documents,” Adzic added.

TerraUSD was a so-called “stable coin” designed to maintain a constant price of $1 while the value of Luna fluctuated.

But officials have said that TerraUSD and Luna were paired so that a fall in one could bring the other down.

They also said Kwon misrepresented the stability of TerraUSD, once a top ten cryptocurrency by market capitalization.

Both currencies collapsed last May, when the price of TerraUSD dropped to less than one penny.

In its civil case, the SEC accused Kwon and Terraform of orchestrating a multibillion-dollar cryptoasset securities fraud.

“We also allege that they committed fraud by making false and misleading statements to build confidence before causing devastating losses to investors,” SEC Chairman Gary Gensler said in a statement.

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