An American court convicts one of the most prominent founders of cryptocurrency companies in a sensational fraud case.

A US court has ruled against 'Do Kwon' and the company Terraform Labs he founded in a major fraud case.

The TerraUSD currency, launched by the company, collapsed in 2022, causing billions in losses for its holders.

"Do Kwon" is currently detained in Montenegro, and it is likely that he will be extradited to the United States or South Korea to face his punishment.

An American court has found the former CEO of the cryptocurrency platform known as Terraform Labs, Do Kwon, guilty of civil fraud charges following a claim by the U.S. Securities and Exchange Commission (SEC).

The verdict came after a two-week trial concluded that Kwon and his company, Terraform Labs, misled investors before the collapse of their cryptocurrency, TerraUSD, in 2022, which caused havoc in the cryptocurrency markets.

Terraform Labs founder Do Kwon did not attend the trial as he has been detained in Montenegro since last year. He was intercepted while traveling to Dubai using forged travel documents for Costa Rica, as he is wanted by authorities in several countries due to the collapse of his company and the damages it caused.

The Securities and Exchange Commission accused both Terraform and Kwon of deceiving investors in 2021 regarding the stability of TerraUSD, which the company claimed was algorithmically backed, as well as falsely claiming that the company's blockchain was being used by a leading payment company in South Korea.

Laura Meahan, a lawyer for the Securities and Exchange Commission, said in closing statements that the platform's success story "is built on lies." She also stated that "if you bet and miss your target, and you don't tell people you failed, that's fraud."

In response, Louis Belligrino, a lawyer for Terraform Labs, argued that the SEC's case relied on data taken out of context and affirmed that Terraform and Kwon were truthful about their products, even when they failed. Terraform also expressed disappointment with the verdict, indicating that they do not believe it is supported by evidence and continue to assert that the SEC lacks legal authority to bring the case.

Currently, Kwon remains detained in Montenegro, where both the United States and South Korea are seeking his extradition on criminal charges. The Supreme Court of Montenegro is currently evaluating competing extradition requests. Kwon's lawyers have called for his extradition to South Korea in hopes of receiving a lighter sentence. However, the Montenegro government plans to approve the extradition of criminals to the United States, according to a report by Bloomberg.

The collapse of the TerraUSD and Luna currencies linked together resulted in investors losing over $40 billion in value. This event also led to a series of collapses affecting major companies in the crypto world, including the collapse of FTX and the major fraud case against its founder and former CEO, who is currently serving a quarter-century prison sentence.

The Securities and Exchange Commission alleges that Kwon and Terraform used improper methods to maintain the stability of the TerraUSD price and deceived users into believing the currency was completely stable due to its algorithm.

In the wake of the series of collapses in the cryptocurrency field in 2022, the public perception of the industry has shifted significantly, especially among lawmakers and global regulatory bodies, which have begun pursuing suspected companies and implementing stricter rules. Some of the most significant cases include the trial of Sam Bankman-Fried, the former founder and CEO of FTX, who was convicted of over 10 fraud cases and sentenced to 25 years in prison. This was followed by a major case against Binance, resulting in the platform being fined billions of dollars in the United States and its CEO, CZ, being forced to step down from leadership.