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Do Kwon pleads not guilty in US court to fraud charges

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5 days ago

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A Manhattan hearing today saw Terraform Labs co-founder, Do Kwon, deny charges tied to the TerraUSD collapse.

Do Kwon, the co-founder the co-founder of Terraform Labs, pleaded not guilty to criminal fraud charges in a Manhattan federal court on Thursday after being extradited from Montenegro, according to Reuters.

The charges stem from his role in the collapse of the TerraUSD and Luna cryptocurrencies, which erased an estimated $40 billion in market value in 2022.

Do Kwon ‘misled’ investors

Federal prosecutors allege that Kwon misled investors about TerraUSD’s stability, claiming in 2021 that its value was maintained by a proprietary algorithm. Prosecutors assert that Kwon secretly used a high-frequency trading firm to artificially sustain the stablecoin’s $1 peg, according to Reuters. 

The indictment includes charges of securities fraud, commodities fraud, wire fraud, conspiracy, and money laundering.

The charges follow a turbulent year for Kwon, who fled as the Terra blockchain collapse triggered a wave of bankruptcies, including high-profile firms like Three Arrows Capital. 

Interpol issued a Red Notice for his capture, and he was arrested in Montenegro in March 2024 while attempting to board a flight with forged passports.

Montenegro’s Justice Minister recently approved Kwon’s extradition to the United States, ending months of legal wrangling between the U.S. and South Korea, both of which sought to prosecute him. Although Kwon now faces significant legal challenges in the U.S., South Korean authorities continue their investigation, which could lead to a 40-year prison sentence if convicted.

Kwon’s next court appearance is expected to outline further proceedings. His case remains a central topic in discussions about accountability within the cryptocurrency industry.



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Alex Mashinsky

Judge denies ex-Celsius CEO’s bid to dismiss fraud, manipulation charges

Published

2 months ago

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November 11, 2024

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Lawyers representing Alex Mashinsky, the former CEO of the crypto platform Celsius facing a criminal indictment in the United States, have lost a motion to drop two charges related to commodities fraud and manipulating the price of the Celsius (CEL) token.

In a Nov. 8 filing in the US District Court for the Southern District of New York, Judge John Koeltl ruled that Mashinsky’s legal team’s arguments to have the charges dismissed were “either moot or without merit.” The judge denied the motion to dismiss the two charges, leaving seven counts on the indictment for the former Celsius CEO’s trial, scheduled to begin in January 2025.

Law, Court, Crimes, Celsius

Source: SDNY

The former Celsius CEO’s lawyers claimed that the securities and commodities fraud charges were inconsistent, as prosecutors alleged the platform’s Earn Program was treated as a security while the Bitcoin (BTC) deposited by investors were commodities. Mashinsky also claimed that he lacked “fair warning” that allegedly manipulating the price of CEL (CEL) was a criminal charge.

The motion to dismiss the two charges filed in January included a request for Judge Koeltl not to allow information on Celsius’ bankruptcy to be included in the criminal case. The judge declined to decide on the motion on Nov. 8, suggesting he would respond to motions in limine or at trial. 

Questions about FTX for jurors

Following the Nov. 8 order, Mashinsky’s lawyers also requested they be allowed to ask prospective jurors questions about their knowledge of the defunct cryptocurrency exchange FTX. According to the legal team, there will “undoubtedly” be testimony about FTX at trial, and the exchange was “toxic in the cryptocurrency world.”

Related: Celsius token surges 300% a month after $2.5B payment to creditors

Authorities arrested and charged Mashinsky with seven felony counts in July 2023. He pleaded not guilty and has been free to travel with restrictions on a $40 million bond.

Former Celsius chief revenue officer Roni Cohen-Pavon, indicted alongside Mashinsky, also faces charges for “illicitly” manipulating the CEL price. Cohen-Pavon initially pleaded not guilty but later changed his plea to guilty. He is scheduled to be sentenced on Dec. 11.

Magazine: ‘Less flashy’ Mashinsky set for less jail time than SBF: Inner City Press, X Hall of Flame