Terraform Labs co-founder Do Kwon charged with 8 criminal indictments

Yahoo Finance’s David Hollerith joins the Live show to discuss Terraform Labs co-founder Do Kwon’s criminal charges.

Video Transcript

BRAD SMITH: The crypto collapse escalates as Terraform Labs co-founder Do Kwon was charged by the US prosecutors with fraud following his arrest in Montenegro. What does this mean for the state of crypto? Yahoo Finance's David Hollerith has the details. David, what do we know so far?

DAVID HOLLERITH: Brad, so Kwon was arrested trying to board a flight in a Montenegrin airport using falsified documents yesterday. Shortly after his arrest and subsequent identification by Interpol, the international police organization, the US Justice Department unsealed an indictment charging Kwon with an alleged eight counts of fraud. Now, the United States office of the attorney in the Southern District of New York tells us it's seeking Kwon's extradition to face charges-- for him to face charges in the US. His native country, South Korea, is also seeking extradition.

While it's not abundantly clear here yet where Kwon will face charges, his journey from star crypto entrepreneur during the 2021 bull market to now has been a tragedy. Once his company was well known for having created this blockchain ecosystem known as Terra. And there are two coins that were reported here, that Luna and Terra. One was a stablecoin, and the other one was a connected cryptocurrency to it. And together, they plummeted in the beginning of May of last year, wiping out a combined $40 billion roughly.

And since then, in the 11 months since then, no one has been able to locate Kwon per se. And he's not really-- I mean, this situation Terra is not blamed for what caused crypto to blow up last year. But it's definitely thought of as the first major event that caused the market to collapse. And Kwon has been under investigation by several government agencies for the past 11 months. In mid-September, he denied he was on the run over Twitter. South Korean court also issued an arrest warrant.

And this followed Interpol also issuing a Red Notice, basically, requesting the location and arrest of him internationally to other government agencies. So, last month, Korean prosecutors also said they were searching for Kwon in Serbia. And the SEC charged him with defrauding investors. So that's where we are. That's where this has all come.