Crypto mogul Do Kwon pleads not guilty in first US court appearance

South Korean cryptocurrency mogul Do Hyeong Kwon pleaded not guilty Thursday to a freshly unsealed indictment released in time for his first U.S. court appearance.

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Kwon entered the plea in Manhattan federal court two days after his extradition from Montenegro.

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The indictment alleges that the man dubbed by some as “the cryptocurrency king” lied to investors from 2018 to 2022 to fool them into pouring money into Terraform Labs, the Singapore crypto firm he cofounded.

Authorities say investors worldwide were harmed by the $40 billion crash of Terraform Labs’ cryptocurrency.

The May 2022 collapse came despite the company’s claim that TerraUSD was a “stablecoin” that could be relied upon.

Kwon did not speak during his court appearance, except to acknowledge that he understood English. His lawyer, Andrew Chesley, entered not guilty pleas to two separate versions of the indictment charging him with conspiracy, along with commodities, securities and wire fraud. A money laundering charge was added Thursday.

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Chesley and another defense lawyer, David Patton, declined comment as they emerged from the courtroom. Their client was returned to a federal jail after the lawyers consented to his detention.

The superseding indictment accused Kwon of deceiving investors by telling them that Terraform had developed novel reliable financial technologies enabling it to turn blockchain technology into a self-contained decentralized financial world with its own money, payment system, stock market and savings bank.

“In fact,” the indictment said, “Kwon’s constructed financial world was built on lies and manipulative and deceptive techniques used to mislead investors, users, business partners, and government regulators” about Terraform’s business.

“Behind the scenes, core Terraform products did not work as Kwon advertised, and were manipulated to create the illusion of a functioning and decentralized financial system in order to lure investors,” it added.