United States v. DO HYEONG KWON, Southern District of New York (Jan. 2, 2025)

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

UNITED STATES OF AMERICA 

V. 

DO HYEONG KWON, 

Defendant. 

The Grand Jury charges: 

SEALED INDICTMENT 

Sl 23 Cr. 151 (JPC) 

Overview 

1. From at least in or about 2018, up to and including in or about 2022, DO HYEONG 

KWON, the defendant, orchestrated schemes to defraud purchasers of cryptocuITencies created 

and issued by a company that he co-founded called Tenaform Labs PTE, Ltd. ("Terraform"). 

KWON claimed that Ten-aform had used blockchain technology to create a self-contained, 

decentralized financial world with its own money, payment system, stock market, and savings 

bank. KWON presented Terrafonn as having developed functionfog, reliable financial 

technologies on the cutting edge of a movement towards "decentralized finance'' ( or "DeFiu), in 

that Terrafotm's products purportedly operated largely through automated mechanjsms and 

economic incentives, and that Terraform's systems were governed by their users rather than by 

KWON and his associates and subordinates. In fact, KWON's constructed financial world was 

built on lies and manipulative and deceptive techniques used to mislead investors, users, business 

partners, and government regulators regarding Terraform's business. Behind the scenes, core 

Tenaform 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. KWON engaged in 

this deceptive conduct in order to pump up the value of Terraform's cryptocurrencies, which 



KWON and entities he controlled (a) possessed in large amounts and (b) sold to investors in 

exchange for billions of dollars' worth of other assets. 

2. The misrepresentations that DO HYEONG KWON, the defendant, made rn 

furtherance of his schemes to defraud included the following: 

a. The Stablecoin Misrepresentations: KWON lied about the effectiveness 

of the system that lay at the heart of Terraform's c1yptocu11"ency empire, the "Ten·a Protocol," 

which purportedly used a computer algoritlm1 to maintain the value of Terraform's so-called 

"stablecoin" pegged to the U.S. dollar, TerraUSD ("UST"), at a value of $1 for one UST. 

Beginning at least in or about 2020, KWON and his associates advertised the Terra Protocol, 

including the economic incentives it created in the market, as sufficient on its own to maintain 

parity between one UST and one U.S. dollar. In particular, KWON claimed that the Terra Protocol 

on its own had caused the successful restoration ofUST's $1 value after it dropped below 92 cents 

in or about May 2021. That was a lie. In truth, after the Terra Protocol on its own failed to cause 

the restoration of US T's $1 peg in May 2021, KWON reached an agreement with executives at a 

high-frequency h·ading firm (the "Trading Firm") to have the Trading Firm purchase large amounts 

of UST to artificially support US T's $1 peg. UST's $1 peg was restol'ed in May 2021 only after 

the Trading Finn strategically purchased millions of dollars of UST for the purpose of artificially 

propping up the peg. 

b. The LFG Misrepresentations: KWON lied about the governance of the 

Luna Foundation Guard Ltd. (the "LFG"), a purportedly independent body the creation of which 

KWON publicly announced in or about January 2022. KWON claimed that the LFG was managed 

by a governing body that operated independently of Te1rnform and was tasked with deploying 

billions of dollars' worth of financial reserves to defend UST's peg. In truth, KWON 

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simultaneously controlled both the LFG and Tenafonn at all relevant times following the creation 

of the LFG; operated the LFG as an arm of Terraform rather than as an independent enthy; 

repeatedly made significant financial decisions for the LFG without the prior approval of its 

governing body; and treated the LFG,s fonds as interchangeable with Terraform's funds when it 

suited KWON's interests, resulting in KWON misappropriating hundreds of millions of dollars in 

assets from the LFG. KWON and others acting at his direction then sought to launder those 

misappropriated funds using a variety of transactions designed to conceal and disguise the nature, 

location, source, ownership and control of the funds . 

c. The Mirror Misrepresentations: KWON lied about the control, operation, 

and extent of user adoption of an investing application on the Tena blockchain called Mirror 

Protocol ("Mirror"), that purportedly allowed for the creation, buying, and selling of synthetic 

versions of stocks listed on United States securities exchanges. KWON claimed that Mirror 

operated in a decentralized manner and that he and Terraform played no role in Mi11'or's 

governance. In truth, KWON and Terraform secretly maintained control over MuTOr, and used 

automated trading bots to manipulate the prices of synthetic assets issued by Mirror. KWON 

funded those manipulative trading bots in part by using a supply of one billion stablecoins that he 

created at the genesis of the Terra blockchain (the "Genesis Stablecoins"). KWON also caused 

Terraform to inflate key user metrics to deceive investors about th.e extent of Minor's adoption 

and decentralization. 

d. The Chai Misrepresentations: KWON falsely claimed that the Terra 

blockchain was being used to process billions of dollars in financial transactions for the Korean 

payment-processing application Chai. KWON pointed to Chai's purported use of the Terra 

blockchain as evidence that Terra had "real world" applications or uses, as distinct from competing 

3 



cryptocurrency platforms. In truth, Chai processed transactions through traditional financial 

processing networks, not the Terra blockchain. To create the illusion that Chai processed 

transactions through the Terra blockchain, KWON and his co-conspirators used an automated 

process that copied transactions onto the Terra blockchain. KWON used the Genesis Stablecoins 

in part to fund these fraudulent eff01is. 

e. The Genesis Coin Misrepresentations: When the Terra blockchain was 

first established in or about 2019, KWON arranged for it to have a preexisting supply of 

approximately one billion Te1Ta stablecoins (the Genesis Stablecoins). KWON provided limited, 

shifting, and knowingly false disclosures to investors about the Genesis Stablecoins. Rather than 

using the Genesis Stablecoins solely for the purposes set forth in his limited and shifting 

disclosw:es to investors, KWON used the Genesis Stablecoins for fraudulent pw:poses, such as 

funding (i) fake Chai blockchain transactions and (ii) trading bots to manipulate the prices of 

synthetic assets issued by Mirror. 

3. Enticed, in part, by the fraudulent claims of DO HYEONG KWON, the defendant, 

both institutional and retail investors flocked to the Terra blockchain, such that, at its peak in the 

spring of 2022, the total market value of all UST and another Terraform cryptocunency, LUNA, 

exceeded $50 billion. Much of this growth followed KWON's brazen deceptions about Ten aform 

and its technology, including effo1ts by KWON and his associates to paper over UST's 

vulnerabilities in May 2021 by secretly manipulating the market for UST. 

4. By May 2022, UST's peg began to break again. By this time, the UST market was 

(a) approximately nine times larger in terms of market capitalization and (b) more than eight times 

larger in terms of daily trading volume relative to one year prior, in May 2021, when the Trading 

Firm was able to assist DO HYEONG KWON, the defendant, in deceptively manipulating UST 

4 



to maintain its $1 value. These significantly changed circumstances led Trading Firm personnel 

in May 2022 to refer to the secret prior peg defense as taking place in "simpler times," and to note 

that "[u]nfortunately it wasn' t so simple this time" compared to when "about $100 M[illion] 

committed was enough to re-peg." While KWON was able to cover up the weaknesses of the 

Ten-a Protocol in May 2021, he was not able to do so in May 2022 when the market had expanded 

substantially. As a result, UST and LUNA crashed, resulting in over $40 billion wotih in investor 

losses. 

5. After the crash of UST and LUNA in May 2022, and the initiation of government 

investigations in multiple jurisdictions into the crash, DO HYEONG KWON, the defendant, 

sought to continue Terraform's business operations and made public misrepresentations about 

being in "full cooperation" with law enforcement inquiries. In truth, KWON fled to foreign 

jurisdictions in which he believed he could purchase political influence and evade legal 

accountability for his fraudulent conduct by using the substantial resources he had obtained 

through fraud. In a recorded conversation with an associate in or about August 2022, KWON 

stated, in substance and in pa1t, that his strategy with law enforcement investigating the crash of 

UST and LUNA was to "tell them to fuck off," and that he had been taking steps to obtain "political 

protection" from multiple countries and was "pretty comfo1table" that he would not be extradited 

to face criminal charges. On or about March 23, 2023, KWON was arrested in Europe for trying 

to use a fraudulent passp01i to travel to a country i11 the Middle East that does not have an 

extradition treaty with the United States. 

Background on Terraform and its Products 

6. Terraform: Terraform was founded by DO HYEONG KWON, the defendant, and 

another individual (the "Co-Founder") in or about 2018, and incorporated under the laws of 

5 



Singapore. Terraform employed personnel around the world, including in the United States. Early 

in its existence, Terraform's operations were closely intertwined with the business that operated 

Chai (which operated through a variety of affiliated entities, such as Chai Pay Holding Company 

Pte. Ltd. and Chai Corporation, together referred to herein as "Chai Co"). Dtuing that early time 

period, Terraform and Chai Co. shared employees and office space. However, KWON and the 

Co-Founder separated the business operations of Terraform and Chai Co. in or about March 2020 

because of regulatory restrictions that applied to Chai Co. due to its status as a licensed electronic 

payments business. Thereafter, KWON became the CEO of Terraform, and the Co-Founder 

became the CEO-of Chai Co. KWON artd the Co-Founder each remained a shareholder of 

Terraform as well as Chai Co., with KWON owning approximately 92% of the equity in 

Tenaform. 

7. The Terra blockcbain: Terraform's business centered on the Terra blockchain. A 

blockchain is a distributed electronic database or ledger that is shared among the nodes of a 

computer network. In theory, the distributed nature of electronic information ensures that accurate 

electronic records can be maintained even if one pa11 of the system fails or if some of the nodes 

become corrupted. Terraform constructed the Terra blockchain using popular and publicly 

available software components and its basic design resembled that of many other blockchains. DO 

HYEONG KWON, the defendant, and other Terraform pers01rnel frequently touted the fact that 

the Terra blockchain and its core products were purportedly decentralized, i.e., that the broader 

community of users of the blockchain and its applications controlled their operation, as opposed 

to KWON and other Terraform personnel maintaining centralized control. 

8. LUNA: Terraform first began promoting the private sale of LUNA in or about 

2018. DO HYEONG KWON, the defendant, along with others, created and promoted LUNA as 

6 



the Tena blockchain's native token that could be used both to earn financia l rewards and to play a 

role in the governance of the system. Specifically, by "staking" LUNA within the Terra 

blockchain, i.e., agreeing to lock up LUNA tokens within the system in a particular manner, 

holders of LUNA received the right to earn fees from transactions on the Tena blockchain and to 

vote on certain decisions affecting the blockchain. An increase in the number of transactions on 

the Terra blockchain would lead to greater rewards for LUNA holders who staked their tokens. 

Tenaform promoted LUNA to investors as providing "equity in Terra's decentralized economy." 

9. Do Kwon: DO HYEONG KWON, the defendant, co-founded Ten·aform in or 

about 2018, and served as its CEO from in or about 2020 through in or about 2023 . KWON 

initially led engineering and research at Terraform, and involved himself in the technical details 

of Terraform's projects. For example, KWON co-authored a white paper concerning the design 

of core aspects of Terraform's technologies and participated in the software development of the 

initial iterations of the Terra blockcbain. KWON also represented Tel1'aform to the public. 

KWON met with investors and potential investors, gave media interviews, and attended 

cryptocurrency industry conferences to promote Tenaform and its products. KWON solicited and 

obtained investments from a number of investment firms in the United States and other locations, 

with the investments primarily consisting of agreements for the purchase or loan of Ten:aform's 

cryptocurrencies such as LUNA. KWON become one of the most prominent business leaders in 

the c1yptocurre11cy industry due to his work at Terraform, which led Forbes Magazine to name 

him to its "30 Under 30" list for Finance & Venture Capital in Asia in 2019. 

10. The Terra Protocol: Tenaforrn distinguished the Terra blockchain from other 

competing blockchains by issuing so-called algorithmic stablecoins pursuant to what it called the 

"Terra Protocol." As described by DO HYEONG KWON, the defendant, and others, these 

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stablecoins maintained a steady value even under changing market conditions. This stable value 

was purportedly maintained through an automated algorithmic mechanism in which users could 

exchange a Terra stablecoin on the Ten-a blockchain for a certain amount's worth of LUNA at a 

guaranteed price, and vice versa, regardless of the market price of the stablecoin at the time. Users 

could also exchange one type of Terra stablecoin for another tlu·ough the Tena Protocol. 

Terrafonn referred to this process of on-chain exchange of one Terraform token for another as 

"burning" an old token and "minting" a new token. While many competing stablecoins were 

backed largely or entirely by reserves of fiat currency or other monetary instruments, KWON 

touted the Terra stablecoins as backed principally by the promise that the stablecoin could be 

exchanged for LUNA at a certain price. The blockchain's "smart contracts" supposedly adjusted 

arbitrage incentives relating to the burning and minting process in order to regulate the supply of 

Terra stablecoins and LUNA to maintain a steady value for the stablecoins. 

11. UST: Terraform publicly annow1ced the launch of UST in or about September 

2020. Terraform promotional materials claimed that, tmder the Terra Protocol, one UST could 

always be exchanged for $1 worth of LUNA through the on-chain burning and minting process, 

and $1 worth of LUNA could always be exchanged for one UST. This relationship was supposed 

to maintain a $1 unit value for UST through an algorithmic maintenance of the supply of both 

coins that relied on arbitrage incentives. According to statements made by DO HYEONG KWON, 

the defendant, and others at Te1rnform, if the market price of UST dropped below $1, market 

participants would be incentivized to burn UST to mint $1 worth of LUNA for each burned UST. 

This would reduce the supply of UST, and thus cause its value to return to $1 under the economic 

law of supply and demand. Conversely, if the market price of UST exceeded $1, then market 

participants would be incentivized to bum LUNA to mint UST at a rate of $1 worth of LUNA for 

8 



UST worth more than $1. This would increase the supply of UST, and thus cause its value to 

return to $1 under the economic law of supply and demand. Thus, while LUNA was designed to 

fluctuate in value, UST was supposed to maintain a steady value of $1 tlu-ough the arbitrage 

incentives created by the Terra Protocol. The existence of this mechanism was supposed to assure 

investors that UST's price would remain fixed at approximately $1, and to value UST accordingly. 

12. Terraform's "DeFi" Applications and Entities: Over time, Te1rnform and its 

affiliated entities developed and laW1ched various purportedly decentralized finance applications 

and entities designed to increase the number of users and transactions on the Terra blockchain, 

including the following: 

a. Chai: Chai was a Korean payment platform that purportedly began using the Terra 

blockchain to process financial transactions in or about June 2019, creating both (i) a real-world 

application for the Terra blockchain; and (ii) a means of generating substantial fees for LUNA 

holders. 

b. Mirror Protocol: Mirror, a platform launched in or about December 2020 that 

allowed for the creation, buying, and selling of synthetic versions of financial assets, such as stocks 

listed on United States securities exchanges, using the TetTa blockchain. These synthetic financial 

assets were called "mAssets." 

c. Anchor Protocol: Anchor, a platform launched in or about March 2021 that 

allowed for the borrowing and lending of UST, and that offered an approximately 20% annual 

retum for UST deposited in Anchor. 

d. The Luna Foundation Guard: The LFG, an entity incorporated in Singapore in 

or about December 2021 and publicly launched in or about January 2022, eventually maintained 

billions of dollars' worth of financial reserves in the form of other cryptocurrencies such as bitcoin 

9 ... 



(the "LFG Reserve") purportedly to support UST's peg to the dollar. The LFG was promoted as 

being governed by an independent body of industry experts (the "LFG Governing Council"). 

The Stab)ecoin Misrepresentations 

Kwon Sees Opportunity in Cryptocurrency Depelldi11g on Olle's "Moral Constitution" 

13. DO HYEONG KWON, and the Co-Founder first began discussing the creation of 

a stablecoin in or about early January 2018. In an email exchange that month, the Co-Founder 

asked KWON's view on the many cryptocurrencies being launched around that time, observing 

that it "[a]lmost seems like a huge ginonnous bubble that we should somehow partake in before it 

crashes?" KWON responded that there were " [g]ood returns to be had'' on different kinds of 

cryptocurrency projects "depending on your risk appetite / moral constitution;)." The Co-Founder 

observed to KWON that there were "frothy market conditions" in the cryptocunency industry in 

which it "almost feels stupid not to take part," and that the requirements for a successful 

cryptocurrency launch had "nothing to do with the fundamentals of the business," but rather 

depended on a "convincing and lofty white paper" and a "deep network of big name partners," 

an1ong other assets. Later in that email exchange, KWON offered his thoughts on the design of a 

potential algorithmic stablecoin, advocating for developing a stablecoin that used a "clever 

algorithm" and "curation" by a centralized foundation as a "[w]inning strategy." KWON also 

observed that for algorithmic stablecoins, "[s]tabiUty has not been proven" and that a "catastrophic 

event (market-wide crash) could de-peg the coin." 

Kwon Promotes the Terra Protocol 

14. DO HYEONG KWON, the defendant, began promoting Terra.form's 

cryptocurrencies to potential investors in or about 2018, and came to serve as the principal public 

face of Terraform through the crash of UST and LUNA in May 2022. 



15. In public presentations and conversations with potential investors and others, DO 

HYEONG KWON, the defendant, and others acting at his direction, promoted the Terra 

blockchain by emphasizing tlie design of its stablecoins, including UST, that operated through the 

purportedly automated and decentralized Terra Protocol. For example, in a videorecorded 

interview that was published on a fmancial news website on or about October 25, 2021, KWON 

promoted the purportedly decentralized nature of Terraform's c1yptocw-rencies, including in the 

following statement: 

It is cmcial that a decentralized economy and these decentralized 
apps depend on decentralized money. And that is essentially sort of 
the core thesis behind what Terra is working on in the sense that we 
have these stablecoins that are pegged to various different fiat 
currencies such as the U.S. dollar, the Korean won, the SGD 
[Singapore dollar] and so on and so forth that are entirely 
decentralized and cannot be censored. 

An image from that interview is reproduced below, including a graphic showing the significant 

increase in the value of LUNA: 

TERRA USD (lUNAI USD) 
42.76 
+1.84 (•4 .49%) 

GO 

)0 

-0 ore ,~.. ,r, 1,1,.A APk 1,1,.y ,UN M AUG ,., OCT 

As another example, in an interview on the cryptocurrency news program "Unconfirmed" that was 

distributed via YouTube and podcast on or about October 29, 2021 (the "October 2021 

11 



Unconfirmed Podcast"), KWON made the following statement: 

So the differentiator of TerraUSD versus some of the better known 
stablecoins in the industry such as Tether and USDC is that it's 
decentralized and algorithmic. Right? So while uh for something 
like Tether there is a dollar in bank deposits uh, supposedly, for 
every un.it of stablecoin that's issued, Terra uses a set of on-chain 
incentives to make sure that the coin can maintain pr.ice parity with 
the dollar. 

As discussed in greater detail below, KWON's representations to investors about how Terraform's 

stablecoins would maintain their stability shifted over time as KWON increasingly sought to 

portray the Terra block.chain and its products as decentralized and automated. 

Kwon 's Early Statements About the Need for a Reserve to Support tlte Terra Protocol 

16. In or about the first year of Terraform's existence, DO HYEONG KWON, the 

defendant, made less ambitious statements about the strength of the Terra Protocol compared to 

the claims he would make later on. This early messaging coincided with Terraform's first two 

rounds of fundrais.ing from investors, including a first seed round approximately between April 

and May 2018, and a second seed round approximately between August and October 2018. In that 

earlier time period, KWON represented to investors in promotional materials that his stablecoins 

would not rely solely on the Terra Protocol to maintain their consistent value, but also on 

substantial reserves of both fiat cunency and LUNA to ensure the stability of Terraform's 

stablecoins. For example, in 2018, KWON distributed a document promoting the private sale of 

LUNA (the "2018 Private Offering Document") that made the fo llowing representations: 

a. Terraform would initially devote 80% of its funds to a centralized 

"temporary fiat reserve" and then "gradually transition from leaning on the fiat reserve to 

fimctioning as a fully decentralized system." The contemplated centralized reserve of fiat currency 

was to "act as a guarantor of last resort, ensuring the ability to buy up Terra during extreme market 

12 



downturns" and provide "an additional layer of safety to the Protocol" that "need[ed] to be put in 

place in the early days after network launch, when the ecosystem is most vulnerable." 

b. Terraform would also establish a longer term, decentralized "Stability 

Reserve" of LUNA, consisting of 20% of the total supply of LUNA (i.e. , 200 million out of the 

one billion total LUNA tokens) "to protect the stability of the system" and supplement the Terra 

Protocol, with the balance of the total supply of LUNA allocated to Terraform employees (200 

million LUNA) and investors and business partners (600 million LUNA). In the longer term, 

according to the 20 18 Private Offering Document, Tenafonn would rely on both the Terra Protocol 

and the Stability Reserve of LUNA to maintain the stability of the company's stablecoins, and 

Terraform was "confident that the decentralized Stability Reserve and the Terra Protocol [would] 

be effective in guaranteeing solvency in the long run." 

Kwon Begins Claiming that the Terra Pl'otocol Alone Will Maintain the Peg 

17. Leading up to UST's launch in or about 2020, DO HYEONG KWON, the 

defendant, began making substantially different representations to many investors about how 

Terraform's stablecoins would maintain their stability. Specifically, KWON began promoting the 

Terra Protocol to investors as sufficient on its own to maintain the fixed value of UST, without the 

support of any sort of financial reserve. This shift in messaging coincided with Terraform seeking 

a new "growth" round of funding from investors beginning in or about the middle of 2019. 

18. This shift was reflected in revisions to an investor presentation document 

distributed by DO HYEONG KWON, the defendant, and others at Terrafom1. An early version 

of that document, distributed in or about July 2018, included a slide referencing the establishment 

of a "stability reserve" (depicted below on the left, with relevant text highlighted); however, a 

13 



version of that document distributed approximately one year later, in or about July 2019, removed 

the reference to a "stability reserve" from a substantially similar slide ( depicted below on the right). 

And guorantees solvency 
through a decentralized stablllly reserve 

~ 
... ... _ , .... ,. .............. , .. . , ................ ,. ~ ..... 

Cua,11ntt1d Otc tntraflud 8olv,ncy 

,., ... ,_,,,_ .. , .. 
1U•--· _.._ONO ... -.. --··-··-­lo#N- •••• 

) 

The relationship 
btlw.tn TtITT ancs Lun,i 

) 

The revised July 2019 version of the slide deck also portrayed the Terra Protocol as the exclusive 

mechanism through which Terraform's stablecoins would maintain their pegs, asserting that "[t]he 

system maintains Terra's price peg by standing ready to swap Terra and Luna at the peg," as 

reflected in the excerpt below. 

HOW LUNA IS USED 

TO STABILISE 

THE PRICE OF TERRA 

Thr. system ma1nta111~ Terr,1 price rrng ny 
stand111g n•acJy to swc1p Terril ancl Lunn at !he peq 

lllustr11t1vn exrnnplC? of !>t:1b11ls;-it1on 111echon1 .in 1n 

L;Ortll .tCt ionary q•df' 

Al UI "''"' tr• (ltt) fl lQt o:,noit J'l It '"' c11c,.,111·1ri1J lV(l,l'I', (If 11 •,1'.J .. u Jt(rl'I~ 

Dllr'IClr'-',j tnt '" (f I HJ .. to t-ttl 

The protocol ,lCljUSlS It ans;i, t1011 li!tlS and 
atlo1'flti(lll f)f new 111011cy (~e1g11lt)I riye) lll lllOlflldUl 

tal>le <Jernand ror Lww 111 all r conornlc: 1 onclil1ons 

Thus, by the time UST was launched in or about 2020, KWON represented to investors that the 

Terra Protocol, including the the economic incentives it created, was the sole mechanism that 

would be used to maintain the pegs of Terraform's c1yptocurrencies. 

14 



19. DO HYEONG KWON, the defendant, caused Tenaform to repeatedly represent to 

investors between in or about 2019 and in or about 2021 that the Terra Protocol, including the 

economic incentives it created in the market, was sufficient on its own to maintain the fixed value 

of UST. Indeed, Terraform's promotional materials began to advertise the Terra Protocol as the 

exclusive mechanism through which Tenafom1's stablecoins would maintain their pegs. KWON 

and others at Tenafo1m touted this as proof of the decentralized nature of the Terra blockchain 

and its core products. For exan1ple: 

a. On or about February 22, 2019, Terrafonn's head ofresearch published an 

article titled "Introducing the New Te1rn Protocol" explaining how the Terra Protocol maintained 

the price pegs of Terraform 's stablecoins. Later, on or about September 16, 2020, KWON sent a 

link to that a11icle to a business partner and explained, "We have an algorithmic stability model 

where the protocol 'makes the price' of the stablecoins by allowing tokens to be swapped at par 

with luna." The business partner asked in response, "so there is no reserve right?" KWON replied, 

"no reserve.'' 

b. On or about October 21, 2020, KWON caused Terraform to publish a video 

on its YouTube channel titled "How Does Terra Work?" The video explained, in substance and 

in pru1, that Terraform had "designed a machine that swaps one dolJar worth of LUNA to one 

UST" (i.e. , the Terra Protocol algorithm) and this mechanism, combined with market incentives, 

would respond to any variation in UST's price by "bringing its price back to the $1 peg." A portion 

15 



of that video with an animated depiction of Terraform's Terra Protocol "machine" is depicted 

below: 

C 0 i youtube.com/watch?v=KqpGMoYZMhY&t=17s 

- D YouTube 

How Does Terra Work? 

••• A) Shoie 

284,509 ,iew, O<tZl, 2020 
How dMS Tt nH '11bJlltyrnte..Pllnl'"1 v.otk? i.·,, t JCpi.1n hOWTttrl lfflUlll"i! 111b!t Utbino lll"il •a co-l1tt r11, l ht foundrtlon thi1 tnal:IIH \ht Klllb•litY ftQUltt<S ro, fflUI l dOP,IOf\. 

The video also stated that "much like the moon which stabilizes the earth's .rotation, LUNA and 

its stakers are essential to Terra's stability. Join us on our mission to create a truly open and 

transparent monetary platform that no one controls, setting money free for billions worldwide." 

c. In or about 2021, KWON and other Terraform employees distributed a 

fundraising document to multiple investors asserting that the Terra Protocol "keeps UST on peg." 

16 



20. DO HYEONG KWON, the defendant, gave numerous interviews in which he 

promoted the Terra Protocol, including the economic incentives it created, as the sole mechanism 

that maintained UST's peg. For example: 

a. In an interview on a podcast called "The MikoBits Show" that was 

distributed on or about January 28, 2021, KWON stated, "So Terra is different in the sense that 

it's an algorithmic stablecoin, so, which means there are no reserves that are backing the 

stablecoin." An image from a video version of that interview posted to YouTube is reproduced 

below: 

C, In) !; youtubt.com/vlalCl1lv•~Ps_W0b89M&t •1531s 

- D VouTube 

MlkoBlll Blockchaln, NFT anG DtFI Show 

S,188ritw1 Jan.20, 202.1 

b. In an interview on a podcast called Modern Finance that was distributed on 

or about June 22, 2021, KWON was asked by the host, "how do you maintain the peg?" KWON 

responded, in substance and in part, "at any given time the protocol it basically acts as the price 

17 



maker for Tena, regardless of what its secondary market prices might be." KWON claimed that 

this was possible because there were "tons of different traders" who used automated trading "bots" 

to take advantage of the arbitrage opportunities provided by the Terra Protocol. 

c. In an interview on a podcast called "This Week in Startups" that was 

distributed on or about July 22, 2021, KWON stated "so Terra USD is in sort of a burgeoning class 

of stablecoins called algorithmic stablecoins and the idea is there that while the cwTency remains 

itself pegged to a fiat currency like the dollar it's not backed explicitly by a dollar in the bank 

account instead it uses a set of game theoretic incentives that live on a blockchain uh to make sure 

that the currency retains its value against the dollar .. .. " 

21. With respect to Tenaform's early investors who had once been told by DO 

HYEONG KWON, the defendant, that the Terra Protocol needed a stability reserve as a backstop, 

KWON claimed that such a support system was no longer necessary . On or about January 6, 2021, 

KWON sent messages to multiple early LUNA investors asserting that " [m]any of the use cases 

for tokens that we had designed when we first launched the network don't make sense anymore" 

such as "a stability reserve." 

22. As DO HYEONG KWON, the defendant, promoted UST and the strength of the 

Terra Protocol, the market capitalization of Terraform's cryptocurrencies increased dramatically, 

18 



from under $200 million in or about the end of 2019 to over $40 billion by the end of 2021 , as 

depicted in the chart below: 

50 

10 

Terra Asset Market Caps 

Terra (LUNA) Markel Cop 

- TcrraUSD (UST) Mnrkct·Cap 
- TcrraKRW (KRT) Morkcl Cap 
- Total 

d>-~0"49'l.,\r;::,,"\,~~~ ~~ "t-~,.,~~'\ ... ❖<;- -.....s "(-❖"-oc,'l.J~ 0~ ~04911," "\,~'V'~~ ~~ "(-~~fb,'\,....❖<:- \~ "(-❖6cc,c,~ &'..:;.,04,l 

Dale 

The Trading Firm's Agreements With Terra.form 

23. In or about November 2019, Terrafom1 entered into a formal written investment 

agreement with the Trading Finn. Under that agreement, and an amendment to the agreement 

signed in September 2020, the Trading Firm had the right to obtain up to 65 million LUNA at 

specified prices under $1. However, the agreement contained certain restrictions on the Trading 

Firm's rights to obtain the LUNA. Specifically, the agreement divided the 65 million LUNA into 

different tranches, with each tranche including separate tlu-eshold requirements for the Trading 

Firm to receive a certain amount of LUNA. The tlu-eshold requirements consisted of the Trading 

Firm minting a certain number of UST, and cryptocunency exchanges experiencing certain 

volumes of UST trading. 

24. Separate from those formal agreements, in or about August 2020, the Trading Finn 

and Terraform entered into a "gentleman's agreement" for the Trading Firm to help maintain 

UST's $1 peg. That agreement was reflected in an August 25, 2020 email between an executive 

19 



at the Trading Firm ("Trading Firm Executive-1 ") and DO HYEONG KWON, the defendant, and 

was not publicly disclosed. In the email, Trading Fi1·m Executive-I proposed financial incentives 

"that align us in the most direct fashion," and referenced the "gentleman's agreement" that, among 

other things, the Trading Firm would "supp011 trading on terra stable coin pairs on all exchanges 

we're connected to and help maintain the peg." In a subsequent internal email, Trading Fi1m 

Executive-I sent an email stating that he viewed the Trading Firm's investment with Terraform as 

potentially resulting in a "multi-billion dollar enterprise" and "a pile of profits and money printing 

maclune that spits out a continuous strean1 of widely adopted stablecoins." 

Tlie May 2021 Depegging of UST 

25. In or about May 2021, approximately one year before the crash of UST and LUNA, 

UST's $1 peg began to break and UST traded substantially below $1 on cryptocurrency exchanges. 

By on or about May 23, 2021, the market price for both UST and LUNA had fallen significantly, 

with UST dropping below 92 cents and LUNA losing approximately 75% of its peak value over a 

period of days, as depicted in the chart below. 

1.00 ~ - ~ -

0.99 

0.98 

0 2, 0.97 
II) 

-~ 0.96 
~ 
f-, 
~ 0.95 

0.94 

0.93 

0.92 

UST 
LUNA 

01 03 OS 07 

Price of UST and LUNA in May 2021 

r 
09 II 13 15 17 19 21 23 

Date 

20 

25 27 29 31 

6 

4As UST's market price remained below $1, the market price of LUNA declined to the point that 

the total market capitalization of LUNA (which purpo1tedly supported the value of UST th.rough 

the Terra Protocol) fell below the total market capitalization of UST, as depicted in the chart below. 

May 2021 Daily Markel Caps 

- UST 
LUNA 

---~··· ~ . 

01 03 05 07 09 II 

I I . . 
• • ..... 

13 15 17 J 9 21 23 25 27 29 31 
Date 

Under those circumstances, the Terra Protocol could not even in theory have operated as promised 

and provide UST holders with $1 worth of LUNA for eve1y UST token because the aggregate 

amount of LUNA in existence did not have sufficient value to be redeemed for the aggregate face 

value of all UST in existence, i.e., the market cap of UST exceeded the market cap of LUNA. As 

a result, the decline in the prices of both UST and LUNA in May 2021 posed systemic risks to the 

viability of UST. 

26. The substantial drop in the price of UST in or about May 2021 resulted in the 

"burning" of large amounts of UST in order to "mint" LUNA, a dynamic that DO HYEONG 

KWON, the defendant, had advertised as the means by which the Terra Protocol would restore 

UST's $1 peg. However, one aspect of the Terra Protocol design significantly limited its 

effectiveness when the protocol experienced a high volume of "burn" requests going in only one 

21 



direction: KWON designed the Tena Protocol to impose increasingly large transaction fees under 

those circumstances. Thus, when the Terra Protocol experienced many more requests to burn UST 

than to burn LUNA, burning UST resulted in receiving less than $1 worth of LUNA due to the 

higher transaction fees, reducing the incentive to actually use the Terra Protocol. In May 2021, 

the Terra Protocol was configured to effectively handle only approximately $20 million in 

redemptions of UST for LUNA before fees grew to a level that it became unprofitable to use the 

Terra Protocol as an arbitrage mechanism. This fee structure acted as a tlll'ottle on the Terra 

Protocol's effectiveness in the face of significant selling or buying pressure for UST, and was not 

disclosed in many of Ten a.form's promotional materials. 

The Trading Firm's Secret Role in Restoring the UST Peg in May 2021 

27. After UST began to lose its $1 peg in May 2021, DO HYEONG KWON, the 

defendant, negotiated a secret oral agreement with the Trading Firm pursuant to which the Trading 

Firm agreed to purchase tens of millions of dollars of UST and LUNA for the purpose of artificially 

propping up UST's $1 peg. In exchange, KWON agreed to accelerate the delivery of LUNA to 

the Trading Finn under the patties' investment agreements. This quid pro quo agreement between 

Terra.form and the Trading Fim1 was never memorialized in writ ing, and the accelerated LUNA 

delivery schedule was not included in a written contract between the patties until in or about July 

2021. 

28. As a result of the May 2021 secret agreement between DO HYEONG KWON, the 

defendant, and the Trading Finn, the Trading Firm authodzed its traders to spend tens of millions 

of dollars to artificially prop up UST. The Trading Firm suspended ce1tain automated trading 

strategies relating to UST and LUNA that had long been in place, and began placing manual trades 

to support UST's peg. An internal Trading Firm document noted that as of May 23, 2021, "LUNA 

22 



[was] down 40%" and this gave rise to a "fear of a run on the bank given that UST is 'backed' by 

LUNA and LUNA market cap dipped below UST market cap .... " The document noted that 

under these circumstances, the Trading Firm "[n]eeded to support UST directly" on a particular 

cryptocurrency exchange (rather than using the "on chain" Terra Protocol), and that the Trading 

Firm had put in place a trading strategy to selJ up to $50 million worth of another cryptocunency 

(Tether) for UST. Ultimately, the Trading Firm authorized its traders to spend up to $100 million 

worth of assets to defend UST' s $1 peg should it prove necessary. 

29. The Trading Finn's purchases of UST after the coin lost its $1 peg in May 2021 

made up a substantial portion of purchases in a key market for UST at critical times. For example, 

during an approximately thirty-minute period on May 23, 2021, the Trading Firm made over 90 

percent of the UST purchases in one major UST trading marketplace. Specifically, on the morning 

of May 23, 2021, the Trading Firm manually purchased millions of dollars ' worth of UST using 

the stablecoin Tether on the cryptocurrency exchange KuCoin, contributing to an increase in the 

market price of UST, as depicted in the chart below. 

Trading Firm's Proportion of UST Purchases in the KuCoin USDTUST Trading Pair 

10:30 10:35 10:40 10:45 10:50 10:55 11 :00 
Time (EDT - May 23, 2021) 

Trading Fimi's mnnual buy volu,uc ns pcrcc1H3gc of h>lnl m11rkct - Mnrkcl trodc price 

0.98 C: 
~ 

0.97 :?. 
@ 

o.96 c 
(I) 

0 .95 8 

30. The Trading Firm's purchases of UST on May 23, 2021 and May 24, 2021 were 

principally aimed at artificially propping up the market price of UST, as opposed to obtaining UST 

at the best available price in the market. For example, the Trading Firm placed orders on a 

cryptocurrency exchange to purchase UST at prices that were higher than the prevailing market 

23 



price on that exchange. In other words, the Trading Firm agreed to pay more than market price 

for UST as part of an effort to artificially inflate the value of UST towards its advertised $1 price. 

31. Following the Trading Firm's purchases of substantial amounts of UST and LUNA 

in May 2021, UST returned to an approximate market price of $1 . 

32. DO HYEONG KWON, the defendant, and others within Terrafonn believed that 

but for the Trading Firm's rutificial support for UST's $1 peg in May 2021, the token would have 

collapsed at that time, and expressed that view to other Terraforrn personnel. For example, KWON 

stated to a Terraform employee that if the Trading Firm had not propped up UST, Terraform might 

have been "fucked." Also, an internal Terraform employee resource manual from 2021 explained 

that the Trading Firm was "quietly one of the biggest players in crypto" and "the biggest on-chain 

market maker of UST and saved our ass in May this year." 

33. The Trading Firm earned substantial profits as a result of the restoration of UST's 

$1 market price in May 2021. In total, the Trading Firm made over $1 billion in profits from its 

investment in Terraform's cryptocunencies, principally by exercising its options to purchase 

LUNA at or around 40 cents per token under its agreements with Terraform, and selJing significant 

quantities of that LUNA prior to the May 2022 crash, when LUNA's market price peaked at over 

$1 15 per token. Over 90% of the Trading Firm's profits on LUNA were made between May 2021 

and May 2022, and thus would not have been obtained had LUNA and UST crashed in May 2021 

rather than May 2022. 

Misrepresentations About the Means Used to Restol'e UST's Peg ill May 2021 

34. After the May 2021 temporary depegging event, DO HYEONG KWON, the 

defendant, and others acting at his direction, misrepresented the means that had been used to 

restore UST's $1 peg, concealing that KWON bad reached a secret agreement for the Trading Firm 

24 



to deploy its funds for the purpose of artificially restoring UST's peg. KWON, and others acting 

at his direction, falsely claimed that Terra Protocol's algorithmic mechanism by itselfrestored the 

peg without financial support. For example: 

a. On or about May 24, 2021, KWON caused Terraform to state the following on 

Twitter: "The peg is gradually normalizing again and will continue to do so as volatility subsidies. 

Remember, volatility at this scale is ephemeral, not permanent. On-chain swap spreads are 

healing .... The drawdown in the price of LUNA, UST peg deviation, and collateral effects across 

the ecosystem in such extreme market volatility is about as intense of a stress test in live conditions 

as can ever be expected. We just experienced a black swan. Despite sharp dislocations the on­

chain swap spread is mending. UST peg is normalizing, and UST's role as a centerpiece of demand 

for the Tena ecosystem has not changed - buttressing the growth of the Terra economy as the 

system bounces back from distress." 

b. In a podcast called Terra Bites that was distributed on or about May 29, 2021, an 

interviewer asked KWON about the success of the Terra Protocol during the temporary depegging 

of UST earlier that month, stating "there was no particular special action taken that I'm aware of 

by the Terra team, or even the community, in order to bring things back in line and it just took a 

while for UST to re~over its peg. Do you think that's accurate? How, I mean I think it did pretty 

well. I mean it didn't come collapsing." KWON responded as follows, in substance and in part: 

Yeah . . . So, I think one of the good things about this is that, you 
know, even though we've studied and been working on the Terra 
protocol for a really long time now, we've never had a stress test of 
this magnitude. And I think what we've proved is that the Terra 
Protocol indeed does need a lot of, what has been up to now, purely 
theoretical assumptions. And that it can survive black swan events, 
and then sort of, sort of, you know, total death spiral of all of these 
different assets and economies all at once. So I think that that's been 
good .... 

25 



c. On or about June 9, 2021, Terraform's head of communications (the "Terra PR 

Executive") published an article titled "Stablecoins - Defining the Terra Algorithmic Design," 

that discussed the May 2021 temporary depeg of UST. In the article, the Terra PR Executive 

described the Terra Protocol as the exclusive mechanism for maintaining the pegs of Te1Taform's 

stablecoins, stating that Terraform defended those pegs ''indirectly via arbitrage incentives," and 

that the Terra Protocol "valiantly" bandied market volatility in May 202 J. The following year, on 

or about April 18, 2022, the Terra PR Executive directed a reporter for a national newspaper to 

that atiicle, and stated about the May 2021 depegging event: "Tena absorbed what many critics 

call a 'Death Spiral' or 'Black Swan' in a 75% drawdown in the LUNA price, with the UST peg 

recovering naturally via the protocol's mechanics and free market dynamics. . . . It 's hard to 

imagine a more significant volatility event than what occtUTed during that period in such a young 

stage of the Te1rn protocol, and Terra passed the test." 

d. In an October 4, 2021 videorecorded interview of KWON broadcast on the 

YouTube channel of a cryptocurrency entrepreneur, the interviewer stated that with respect to the 

May 2021 depegging of UST that they were "actually was quite impressed with UST dropping I 

thtnk only 10 cents or so, which was interesting to see and I think built confidence in the project," 

and asked whether "Tenaform Labs participates at all in mru·ket making to keep UST at peg?" 

KWON responded that "we don't really do much of that anymore," and stated that "there' s like a 

number of large market makers that participate in stabilizing the peg of UST. Most of them- I 

don' t think any of them have a contractual relationship with us. It's just something that they do 

because they feel like they can make money out of it .... " KWON's statement was lmowingly 

false at1d misleading. As KWON well knew, the Trading Firm had a "gentleman's agreement" 

with Terraform to support UST's $ l peg, and the Trading Film purchased large amounts of UST 

26 
.... 



in May 2021 in exchange for an oral promise by KWON to accelerate the delivery of LUNA to 

the Trading Fi.rm under the parties' investment agreements. 

e. In another interview with the cryptocurrency research and investment firm Delphi 

Digital, specifically a podcast distributed on about October 5, 2021, KWON remarked about the 

May 2021 depegging of UST, in part, "We handled our prices pretty well. So as swaps were 

happening we saw the price peg of Terra USD slip 6 and 7 percent for a period of few days, but 

then it recovered as redemptions started to sort of smooth out in the open market. I think the reason 

that I would have to give as to why Tena is more resilient than other types of algorithmic 

stablecoins is because there's a vibrant economy that is built, that is being built, on the Terra 

blockchain." 

f. Dw·ing a March 1, 2022 episode of an audio talk show called the Ship Show that 

was publicly distributed on Twitter, and that was hosted by personnel from the Trading Firm, 

KWON spoke about the May 2021 depegging event, stating, in part, "it took a few days for the 

slippage cost to naturally heal back to spot ... the protocol automatically self-heals the exchange 

rate back to whatever the spot price is being quoted by the oracle. So that' s why it took several 

days for the peg to recover." 

35. After UST's $1 peg was restored in May 2021, investors continued to purchase 

UST and LUNA, including based on false representations by DO HYEONG KWON, the 

defendant, and others that the Terra Protocol was the sole mechanism that KWON and Terraform 

had deployed to restore UST's $1 peg in May 2021. 

Tlte Establishment of the LFG Following UST's Undisclosed Vulnerability 

36. DO HYEONG KWON, the defendant, subsequently worked to create a new 

financial reserve-the LFG Reserve- to defend UST's $1 peg, without disclosing the Trading 

27 



Firm's secret deployment of its own funds in May 2021 to a1tificially prop up UST's $1 peg. The 

LFG Reserve eventually held almost $3 billion worth of bitcoin, among other cryptocurrency 

assets. Rather than being promoted as a critical attempted fix for a demonstrated vulnerability in 

the stablecoin mechanism, the LFG Reserve was touted in a February 22, 2022 LFG press release 

as merely providing "a fmther layer of support." Trading Firm Executive-I, who was a member 

of the LFG Governing Council, provided the following statement for that press release: "[The LFG 

Reserve] further strengthens confidence in the peg of the market's leading decentraUzed stablecoin 

UST .... It can be used to help protect the peg of the UST stablecoin in stressful conditions. This 

is similar to how many central banks hold reserves of foreign currencies to back monetary 

liabilities and protect against dynamic market conditions." The press release omitted any reference 

to the depegging of UST in May 2021, and the fact that KWON negotiated an agreement for the 

Trading Firm to deploy its funds for the purpose of artificially restoring UST's peg at that time. 

The Explosive Growth of UST and LUNA After May 2021 

37. By in or about May 2022, one year after the May 2021 temporary depegging of 

UST, the total market value and trading volume for UST and LUNA had increased substantially. 

UST's total market value increased from approximately $2 billion to approximately $18 billion, 

and LUNA's total market value increased from approximately $5 billion to approximately $29 

billion. The average daily trading volume of both coins also increased significantly over that one­

year time period: UST's average daily trading volume increased from under $100 mil.lion to over 

$800 million, and LUNA's average daily trading volume increased from approximately $500 

million to approximately $2.5 billion. Thus, when UST's peg began to break again in May 2022, 

DO HYEONG KWON, the defendant, was confronted with a UST market that was (a) 

approximately rune times larger in terms of market capitalization and (b) more than eight times 

28 



larger in terms of daily trading volume relative to May 2021. 

38. A significant amount of this growth was diiven by the approximately 20% interest 

rate offered on UST deposits by Anchor. Sho1tly before the crash of UST and LUNA in early May 

2022, approximately 70% of all UST was deposited in Anchor (approximately $12.9 billion out of 

a total circulating supply of approximately $18.5 billion). Anchor paid out far more in interest to 

its depositors than it earned from its bonowers, and Anchor was able to pay its approximately 20% 

interest rate only because DO HYEONG KWON, the defendant, caused the diversion of funds 

from the LFG Reserve and Terrafonn to Anchor. For example, in or about February 2022, KWON 

caused the LFG to divert approximately $450 million from the LFG Reserve to Anchor. KWON 

himself deposited funds in Anchor, and personally benefitted from these subsidies in light of his 

status as an Anchor depositor. 

39. DO HYEONG KWON, the defendant, was repeatedly warned that the 

approximately 20% Anchor interest rate enabled by substantial subsidies was unsustainable, and 

would contribute to destabilizing the entire Terra blockchain system by artificially inflat ing 

demand for UST. KWON nonetheless maintained the approximately 20% Anchor interest rate. 

Tlte May 2022 Crash of UST and LUNA 

40. In or about May 2022, approximately one year after the temporary depegging of 

UST in May 2021, the market price of UST dropped below $1 and failed to recover despite the 

deployment of large amounts of capital from Terraform and the LFG to support UST's $1 peg. As 

a result, the value of UST and LUNA crashed. While DO HYEONG KWON, the defendant, was 

able to cover up the weaknesses of the Terra Protocol in May 2021, he was not able to do so in 

May 2022 when the market had expanded substantially. In the midst of the May 2022 crash, one 

Trading Firm trader remarked to his colleagues that the Trading Finn' s defense of UST's peg in 

29 



May 2021 took place in "simpler times/' and noted that "[u]nfortunately it wasn't so simple this 

time" compared to when "about $100 M[illion] committed was enough to re-peg." The May 2022 

crash of UST and LUNA resulted in over $40 billion in investor losses. 

The Luna Foundation Guard Misrepresentations 

False Statements About the LFG's Independence and Governing Council 

41. DO HYEONG KWON, the defendant, issued, and caused others to issue, public 

statements asserting that the LFG operated as an independent entity governed by the LFG 

Governing Council. For example: 

a. KWON caused Terraform to issue a tweet on or about January 19, 2022 

asserting that "[t]he LFG is governed independently by an international Council of industry leaders 

and experts .... " 

b. Also on or about January 19, 2022, KWON tweeted that the "LPG is 

governed by top builders in the @terra_money ecosystem," that the LFG Governing Council 

would serve as "a counterweight to TFL [Terraform] in the @terra_money ecosystem," and that 

"[d]ecentralization wins." 

c. On February 8, 2022, KWON stated in a public forum on the internet that 

"[t]he reason we've set up LFG is to decenh·alize decision making processes in the Terra 

ecosystem, and having multiple directors (all building on the Terra ecosystem) make the decision 

instead of one person is an important step in that direction." 

d. Several months later, in a podcast titled "Unchained" that was distributed 

on or about March 29, 2022, KWON stated that the approximately $3 billion wo1th of bitcoin held 

in the LFG Reserve at the time was held by the LFG Governing Council in secure "multisig" (short 

for "multi-signature") wallets, i.e., cryptocwTency wallets that require multiple private keys to 

30 



approve a transaction. Specifically, KWON stated about the LFG Reserve, "so the Luna 

Foundation Guard has a, you know, has a council of about seven people, so its secured in a multisig 

held by the council members." 

e. KWON asserted, and caused others to assert, that the LFG spent 

approximately $2.8 billion wo1th of its own funds in the form of the LFG Reserve (largely 

consisting of approximately 80,000 bitcoin) in a failed effort to defend UST's peg in May 2022, 

and that the LFG used two other purportedly independent pa1ties to make those trades, specifically 

the Trading Firm and Terrafonn. 

f. KWON po1trayed the LFG Governing Council as an independent 

gatekeeper for the use of funds in the LFG Reserve, including dw-ing the time period when UST 

and LUNA crashed in May 2022. For example, on or about May 9, 2022, KWON tweeted, "The 

LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market 

concerns around UST," and that "we made this decision via an unanimous vote of the council." 

Funt/raising for the LFG Reserve 

42. DO HYEONG KWON, the defendant, raised billions of dollars' worth of assets 

from investors to fund the LFG Reserve. In the course of soliciting those funds, KWON repeatedly 

represented to investors that the LFG Reserve would be used to defend UST's peg, and that neither 

the LFG nor Terraform stood to profit from the LFG Reserve. For example, on or about November 

16, 2021, KWON emailed an investor that Ten:aform was looking to raise $1 billion worth of 

bitcoin assets " to put into a decentralized reserve smart contract to buttress UST's stability 

mechanism (users can redeem UST against Bitcoin)," and that "[w]e believe this will assuage 

lingering worries about the stability of UST's core stability mechanism .... " KWON' s email 

attached an investor pitch deck asserting that the fundraising for the LFG Reserve "will be a novel 

31 



philanthropic raise where the funds added are controlled by the community, transparent on-chain." 

Approximately two months later, on or about January 24, 2022, that investor entered into an 

agreement with the LFG to provide approximately $50 million worth of assets for the LFG Reserve 

in exchange for LUNA tokens, with the agreement stating that it was made "in furtherance of the 

establishment [ of] a decentralized asset reserve" that was "a non-profit initiative of the [LFG] to 

provide a further layer [of] support to maintain the UST's peg to the USD," that the LFG Reserve 

was "intended to remain as a decentralised asset reserve in perpetuity to the extent UST remains 

in circulation and is used by members of the community," and that "[n]either the [LFG] nor any 

of its Affiliates stand to profit from the proceeds of [the agreement] and/or (the LFG Reserve]." 

KWON signed the fundraising agreement on behalf of the LFG. 

Kwon 's Control of the LFG a,ul Use of Retroactive Accounting Tricks to Benefit Himself 

43. 1n truth, DO HYEONG KWON, the defendant, simultaneously controlled both the 

LFG and Terrafo1m at all relevant times following the creation of the LFG; operated the LFG as 

an rum of Terraform rather than as an independent entity; repeatedly made significant financial 

decisions for the LFG without the prior approval of the LFG Governing Council; and treated the 

LFG's funds as interchangeable with Tenafonn's funds when it suited KWON's interests. For 

example: 

a. Internal corporate records for the LFG show that KWON established the 

LFG Governing Council on or about January 10, 2022 only as a "non-director subcommittee" 

whose powers were limited to "advjs[ing] ru1d giv[:ing] recommendations" and performing acts 

"deemed necessary or advisable by the Directors . ... " The LFG was legally governed by a two­

person Board of Directors consisting of KWON and a Singaporean business consultant, the latter 

of whom was appointed a Director of the LFG solely to satisfy local Singapore regulations and 

32 



exercised no independent discretion or authority. Fw1ctionally, KWON exercised total control 

over the affairs of the LFG, a reality that was contrary to his representations to investors about the 

LFG's independence, decentralized governance, and status as a "cotmterweight" to Terraform. 

b. The LFG Reserve was not maintained in a "multisig" wallet controlled by 

the LPG Governing Council, as KWON had publicly claimed. In a May 8, 2022 message exchange 

between KWON and Trading Fhm Executive- I relating to the use of the LFG Reserve to protect 

UST's peg, Trading Firm Executive-I asked "will we need lfg multisig for settlement?" KWON 

responded, "no we will not we havent moved fw,ds there yet." Rather, the LFG Reserve was 

actually held in wallets controlled by KWON and not the LFG Governing Council. 

c. Of the approximately 80,000 bitcoin from the LFG Reserve that was 

purportedly spent to defend UST's peg in May 2022, the LFG Governing Council did not hold a 

vote on the expenditure of at least 28,000 of those bitcoin (worth over $800 million). In other 

words, at least 28,000 bitcoin worth of LFG assets were spent in violation of KWON' s promises 

to investors about the LFG's independence and governance, a result made possible by KWON's 

secret control of the LFG and its finances. After one council member learned ofthis unauthorized 

spending and told KWON that "I think it's important to highlight that most of these [LFG Reserve] 

transactions were executed without a vote," KWON responded that "with the community and 

every media outlet out with pitchforks not sure if its the best time to tlu·ow me under the bus." 

d. KWON commingled the assets of the LFG and Terraform, which allowed 

KWON to engage in after-the-fact accounting tricks to benefit himself at the expense of investors 

in the wake of the May 2022 crash. Specifically, after Terraform had already used a substantial 

amount of its own assets in one of its cryptocurrency trading accounts in an attempt to defend 

UST's peg in early May 2022, KWON caused the transfer of hundreds of millions of dollars' worth 

33 



of the LFG Rese1ve into that same trading account (the "Commingled Account") without the 

authorization of the LFG Goverrung Council. Later on, KWON attributed hundreds of millions of 

dollars' worth of prior spending on ultimately wo1thless assets (UST and LUNA) by Terraform­

spending using Tcrraform's own assets in Tenaform's own trading account- to the LFG. In an 

attempt to justify this retroactive accounting, KWON claimed that Tenaform had spent hundreds 

of mi llions of dollars' worth of its own assets "on behalf of' the LFG, with KWON reverse­

engineering the amount of this purported spending "on behalf of' the LFG to justify Terraform 

keeping almost all of the LFG's remaining bitcoin assets. KWON orchestrated this deception to 

maximize the amount of net trading losses in the Commingled Account attributed to the LFG 

(approximately $1 billion), and minimize the amount of net trading losses in the Commingled 

Account attributed to Terrafom1 (approxinlately $600 million). KWON engaged in this retroactive 

accounting without the approval of the LFG Governing Council, and was able to do so only 

because he secretly maintained the power to unilaterally control the LFG and its finances, in 

violation of his promises to investors about the LFG's independence and governance. 

e. After the crash of UST and LUNA, KWON used these retroactive 

accounting tricks as a cover to send a sigruficant portion of the LFG Reserve's remaining valuable 

assets (approximately 12,000 bitcoin worth over $300 million) to Terrafonn as purported 

"reimbursement" for earlier spending "on behalf' of the LFG. KWON took these actions as part 

of an effort to shield his spending of much of the LFG Rese1ve's remaining approximately 12,000 

bitcoin (the "Misappropriated LFG Funds") from public scrutiny. Indeed, after the crash, KWON 

made a commitment in the face of public pressure to distribute only the LFG's remaining funds to 

investors, but not Terrafo1m's remainfog funds, which KWON subsequently used in substantial 

34 



part for purposes that benefitted himself. After the May 2022 crash, the Misappropriated LFG 

Funds made up most of Terraform's assets. 

Money Laundering of Misappropriated LFG Funds 

44. DO HYEONG KWON, the defendant, and others acting at his direction, engaged 

in financial transactions and other conduct designed to conceal and disguise the natUJe, location, 

source, ownership and control of the Misappropriated LFG Funds. For example: 

a. KWON caused the transfer of Misappropriated LFG Funds through 

multiple cryptocunency addresses and accounts, engaging in "layering" transactions designed to 

conceal, among other things, the source of those funds. 

b. KWON caused the transfer of portions of the Misappropriated LFG Funds 

between blockchains, i.e., "bridged" the funds, in order to conceal their nature, location, source, 

ownership and control. 

c. Shortly after South Korean authorHies publicly announced criminal charges 

against KWON on or about September 14, 2022, KWON caused the transfer of Misappropriated 

LFG Funds into and out of centralized cryptocul1'ency exchanges within sho1t periods of time, thus 

concealing the path of those funds on public blockchains. For example, between on or about 

September 15, 2022 and on or about September 18, 2022, KWON caused the transfer of 

35 



approximately $39 million worth of bitcoin into and out of an account at the cryptocurrency 

exchange OKX that had been opened in 2018 (the "OKX Account"), as depicted below: 

9/IS 

9/ 17 

9/18 

1,959.29 
BTC 

~12.l0BTC 

497BTC 

647.J6BTC 

301.51 BTC 

487BTC 

277BTC 

232BTC 

J4S.32DTC 

301BTC 

30J,!>6BTC 

1959.28 
BTC 

As another example, dming the same time period, KWON caused the transfer of approximately 

$27 million worth of bitcoin into and out of an account at the cryptocmrency exchange KuCoin 

that was opened in 2019 (the "KuCoin Account"), as depicted below: 

9/15 

9/)6 

1,353.73 
BTC 

9/17 

9/18 

L1'1f( 

274.25 BTC 

241.l0BTC 

492,32 BTC 

344.22 BTC 

JIIITC 

275 BTC 

ll4.SDTC 

278BTC 

230BTC 

245,32DTC 

100,◄ I UTC 

1353.73 
BTC 

Both the OKX and the KuCoin Accounts were held in Ten-afo1m's name, and a copy ofKWON's 

passport, among other materials, was submitted to both exchanges in connection with those 

36 



accounts as part of "Know Your Customer" ("KYC") procedures. After Misappropriated LFG 

Funds were transferred into and then out of the OKX and KuCoin Accounts within a period of 

days, they were transferred to a Swiss bank account held by Terrafo1m (the "Terraform Swiss Bank 

Account"). Several days later, on or about September 21, 2022, Terrafonn transferred 

approximately $57 million from the Te1Taform Swiss Bank Account to a professional services firm 

retained by KWON and Terraform. 

d. Following public reporting about the transfer of Misappropriated LFG 

Funds to KuCoin and OKX, KWON made a number of false and misleading public statements 

disclaiming his use of OKX or KuCoin, including the following: 

1. KWON issued a September 28, 2022 social media post stating, in 

part, "i havent used kucoin or okex in at least the last year .... " 

n . KWON issued an October 5, 2022 social media post stating, in part, 

"I don't even use Kucoin and OkEx .... " 

111. KWON made a statement during the course of an interview on the 

cryptocunency program Unchained, distributed on or about October 18, 2022, that "I really have 

not used, you know, KuCoin or OKX or done any trading on those platforms, at least as far as I 

can remember, and I definitely don't have any funds there, and if they froze, I don't remember the 

amount, but if it' s like 67 million, I think I definitely would have noticed." When asked by the 

interviewer about analysis showing that approximately 65 million dollars' worth of the 

Misappropriated LFG Funds were sent to KuCoin and OKX, KWON responded, in pa1t, "Like, 

over video call I wouldn't be able to identify, like, an on-chain audit trail or something to that 

effect, but what would be helpful is we've hired a sort of on-chain analysis company and we've 

worked with them to provide all the trading data at LFG, so they should be publishfag a rep01t 

37 



shortly, which I think is going to provide a lot more clarity. So there isn 't any embezzlement, or 

you know, theft of funds or anything to that effect that seems to be cycling through the media." 

An image from that interview is reproduced below. 

Laura Shin Do Kwon 

Do Kwon of Terra: 'It Was Novtr Really About Money or F•m• or Success' - Ep. 408 

O Unchalntd .-_ 
0 •11, .. m r-<M" ~ 

0 151< QI h "'"' r+- ... 

45 . Rather than being used solely to defend UST's peg, or to reimburse investors for 

losses from the May 2022 crash, tens of millions of dollars' worth of the Misappropriated LFG 

Funds were used to pay professional services fees and expenses for DO HYEONG KWON, the 

defendant, and Ten:aform. 

46. 1n order to facilitate the transfer of Misappropriated LFG Funds to financial 

accounts that could be used to pay professional services fees and expenses, DO HYEONG KWON, 

the defendant, caused his agents to make representations to a financial services firm about the 

source of those funds that were not factually accurate, including representations that the funds 

were from software development fees and investment activities. In truth, the source of the 

Misappropriated LFG Funds was the LPG Reserve. Further, in response to inquiries relating to 

38 



anti-money laundering due diligence on the source of the transfers, KWON also caused his agents 

to provide a financial services film with a fake Costa Rican passport for KWON, among other 

materials. 

Kwon 's Distribution of a False and Misleading Audit Report to Cover Up His Crimes 

47. DO HYEONG KWON, the defendant, sought to cover up his lies and misconduct 

by, among other means, causing the distribution of a false and misleading "third party audit" report 

(the "Audit Report") by a consulting firm (the "Audit Firm") advertised by the LFG as providing 

"full transparency into the trading, blockchain records, and efforts" of the LFG and Terraform to 

defend UST's peg. An image of a social media post by KWON promoting the Audit Report is 

reproduced below: 

• Pinned Tweet 
Do Kwon O @stablekwon • Nov 16, 2022 

1/ A third party audit of LFG and TFL:s peg defense activity during May 
2022 has been published: 

0 LFG I Luna Foundation Guard @LFG o,g • Nov 16, 2022 

1/ Today, LFG releases the technical audit report conducted by JS 
Held, an experienced thi rd- party auditing firm , providing full 
transparency into the trading, blockchaln records, and efforts of LFG 
and TFL to defend t he price of TerraUSD ($UST) between May 8th & 
May 12th. 2022. 

Show this thread 

0 1,959 t.1. 1.177 0 3,621 

48. DO HYEONG KWON, the defendant, sought to cover up his lies and misconduct 

with the Audit Report not only to evade any sort of sanction for his crimes, but also to enable him 

to solicit funds from investors to launch a new Terra blockchain under false pretenses. 

49. DO HYEONG KWON, the defendant, caused the public distribution of the Audit 

39 



Report, as well as the distribution of the Audit Report to specific business pa1tners. For example, 

on or about November 14, 2022, before the Audit Report had been publicly released, KWON 

caused the distribution of the Audit Report to the Swiss bank at which the Tenaform Swiss Bank 

Account (containing laundered Misappropriated LFG Funds) was maintained, along with a 

message describing the Repo1t as "the results of an independent 3rd party audit into the LPG peg 

defense showing that all funds were used appropriately in defense of the peg." In fact, the Audit 

Rep01t was not conducted independently of KWON and Terraform, as they claimed. Among other 

things, KWON and his representatives sought to directly dictate certain portions of the report. For 

example, in an October 18, 2022 Audit Firm internal email, a senior employee of the Audit Firm 

noted with respect to certain passages in a draft version of the report that one ofKWON's agents 

had "dictated those paragraphs to us." 

50. On or about November 16, 2022, the day that the Audit Repo1t was publicly 

released, DO HYEONG KWON, the defendant, tweeted that it "shows that all LFG funds were 

spent to defend $UST's peg parity with the Dollar as declared" and that "we fought to the last to 

protect UST and its users." In truth, as discussed above, all LFG fonds were not spent to defend 

UST's peg. Rather, over $300 million in Misappropriated LFG Funds remained in the 

Commingled Accow1t after the crash of UST and LUNA, and were not used to defend the peg. 

Nor were those funds returned to the LFG. Rather, KWON directed after-the-fact that Terraform 

internally account for the Misappropriated LFG Funds as belonging to Terraform as 

"reimbw-sement" for Tenaform's own spending in defense ofUST's peg, and transfer those funds 

to Terrafonn wallets. 1n an effort to generate some "loose math" supporting this fraudulent, post­

hoc accounting, Terraform selected a period of time in the past dming which Tenaform spent 

approximately $1 billion in assets defending UST's peg, and attributed all Terraform trading 

40during that time period to the LFG. That period of time was selected to result in an amount 

approximating the LFG Reserve funds transferred to the Commingled Account. In other words, 

KWON directed Terrafonn to reverse-engineer the company's accounting to provide an excuse 

for Terraform to keep the Misappropriated LFG Funds. 

51. The Audit Report misleadingly omitted (1) that DO HYEONG KWON, the 

defendant, transferred over 28,000 bitcoin (worth approximately $800 million) from the LFG 

Reserve to Terraform without approval from the LFG Gove1ning Council, in violation ofKWON's 

promises to investors about the independence and governance of the LFG; (2) that KWON 

retroactively attributed Terraform spending on UST to the LFG based on an after-the-fact, "loose 

math" accounting fiction; and (3) that this was done not to enable the purchase of additional UST 

or LUNA but rather to shift financial losses from Terraform to the LFG after the fact for KWON's 

benefit. In other words, KWON used the Audit Report to obscure and hide the fact that he had 

lied to investors about the LFG's independence and governance, and engaged in accounting tricks 

to provide an excuse for Terraform to keep substantial amounts of the LFG's assets. 

41 



The Mirror Misrepresentations 

52. As discussed above, Mi1Tor was a Terraform product that purportedly operated as 

a decentralized system for creating, buying, and selling synthetic securities called "mAssets" using 

the Terra blockchain. Users could access Mirror through a web browser, as depicted in the image 

below of Mirror's user interface. 

DO HYEONG KWON, the defendant, lied to investors about the decentralized nature of Mirror, 

including falsely claiming that neither he nor Terraform controlled the protocol's governance or 

operation, and that Mirror's growth was driven by its users. In truth, KWON maintained 

significant influence over the governance of Mirror, manipulated Mirror asset prices, and inflated 

key metrics concerning Mirror's growth. 

Misrepresentations About the Control of Mirror 

53 . Terraform issued the cryptocmrency MIR as a "governance token" for Mirror, that 

42 



is, a type of cryptocurrency that allows holders to vote on decisions relating to the product, and 

thus can decentralize decision-making about how the product operates. 

54. DO HYEONG KWON, the defendant, claimed that neither he nor Terraform held 

any MIR tokens or otherwise controlled Mirror. For example: 

a. On or about December 3, 2020, KWON posted the following public 

statement on Twitter: "In order to maintain censorship resistance, Mirror is entirely decentralized 

from day 1 - the protocol is governed by the MIR token, setting economic parameters, controlling 

the on-chain community fond, and recommending code changes. TFL has no special owner / 

operator keys." 

b. Also on or about December 3, 2020, KWON caused Terraform to issue a 

press release asserting, among other things, that Mirror "is decentralized from day 1, with the on­

chain treasury and code changes governed by holders of the native token, MIR, of which Terrafonn 

Labs holds none. There are also no admin keys or special access privileges granted." 

c. In a podcast titled "The Delphi Podcast" that was publicly distributed on or 

about January 11, 2021, KWON made the following statements when asked about a potential 

"crackdown" on Mirror from U.S. authorities, in substance and in part: 

[A]s we were designing the protocol, we set aside no tokens for the 
team, no tokens for the investors. I received some Minor tokens as 
a function of having my LUNA stakes. But at the end of last year, I 
committed to give all that away to people that act11ally built the 
protocol. So I have nothing, Terra has nothing. And we have no 
governance .rights as a consequence of that. So this is something 
that we do not control, right? So even now, there's 30 different 
proposals that are up on governance. I think it just passed yesterday. 
None of those proposals were from us, it was entirely from the 
community, and the engagement as a consequence of being 
decentralized is huge. . . . The way that I think about it is, at this 
point, we don' t control or own any portions of the Mirror protocol. 
All we did was write code. And you cannot be prosecuted for what 
you do not control and nor do you profit from. 

43 .. 



d. In a podcast titled "Crypto 101" that was publicly distributed on or about 

March 11 , 2021, KWON made the following statements, in substance and in part: 

What we did when we launched Mirror is that we created a 
governance token called MIR which most project teams would 
either choose to retain for themselves or sell to investors or you 
know sell to the commw1ity in the open market. But we kept zero 
pre-mine for the team and then we gave all the tokens away to 
various people in the community . . . . Even if Mirror does well, 
like, nothing really happens to me, like, I don't benefit from it 
financially in any direct sense . .. .. So basically no control, no profit 
incentive, and then uh no owner keys .... 

55. In truth, DO HYEONG KWON, the defendant, and Terraform secretly maintained 

a large number of MIR tokens and exercised substantial control over Mirror, including by voting 

their MIR tokens and maintaining operator keys for Mirror. KWON, and others at Terraform 

acting at KWON's direction, lied to investors about these facts to further the illusion of Mirror as 

a decentralized system (which was one of KWON's principal marketing points for Mirror and 

Tenaform's products more broadly). For example, in internal Terraform messages sent on or 

about July 8, 2021, two Terrafom1 employees discussed how they had lied to the public about the 

decentralized nature of Mirror. Among other things, one of the employees ("Terraform Employee­

l ") stated that he "[n]eed[ed] to pray for forgiveness and repent" because he had just "spent an 

hour talking live" on a cryptocurrency livestream " [a]nd saying minor is decentralized." In the 

same message exchange, another Terrafonn employee ("Tenaform Employee-2") stated "mirror 

isn't decentralized," that it was a "fake it till u make it thing" to "provide the initial illusion to 

make em [investors] believers." Terraform Employee-2 also stated that he "can't belirve [sic] do 

just goes out and tweets TFL holds no MIR," to which Terraform Employee-1 responded "LOL." 

56. DO HYEONG KWON, the defendant, and others at Terraform sought to use the 

company's MIR tokens and blockchain operator keys to undetmine community proposals and 

44 



governance votes. For example, on July 20, 2021, a group of Terraform employees discussed 

using over three million MIR tokens controlled by Terrafmm to vote "no" on a Mirror community 

proposal. A few weeks later, on or about July 26, 2021, KWON stated in a message to another 

Tenafonn employee ("Terraform Employee-3") that "we need to forfeit operator key to 

governance" of Mirror, a reference to the fact that Terraform held a privileged operator key for 

controlling Mi1rnr even though KWON had pubUcly disclaimed that fact. Terrafonn Employee-3 

later told KWON that Te1Taform should limit the number of times it made use of its power to 

control the governance of Mirror and vote down co nun unity proposals, noting that "if this happens 

enough, most people will realize it's the same whale suddenly shooting down the proposals." 

Misrepresentations About the Operation of Mirror 

57. DO I-IYEONG KWON, the defendant, and others acting at his direction, claimed 

the prices of mAssets were set principally by decentralized processes, and not controlled by 

Terraform. Specifically, the price of an mAsset at the time of its creation was supposed to be 

determined by a "pricing oracle" that used data from a decentralized pricing service. After the 

creation of an mAsset, its price was purportedly determined by a decentralized market of buyers 

and sellers. Mi1Tor's rules relating to the posting and redemption of collateral for mAssets 

supposedly created an economic incentive structure that would cause the price of mAssets to track 

the price of the traditional assets that they "mirrored" without any centralized control by 

Terraform. In other words, the Min-or pricing oracle did not automatically dete1111ine the price of 

an nlAsset following that asset's creation; rather, built-in economic incentives for mAsset traders 

relating to the value of posted collateral (specifically the oppo1twlity for arbitrage) were supposed 

to keep mAsset prices pegged to their corresponding traditional asset prices without the need for 

any centralized control or inte1vention by Terraform. KWON explained this purportedly 

45 



decentralized process during an interview on the podcast titled "The Defiant" that was distributed 

on or about Apri l 16, 2021, during which KWON represented that the prices of mAssets remained 

pegged to their underlying assets with "no centralized counterpru.ties." 

58. However, in truth, DO HYEONG KWON, the defendant, caused Terraform itself 

to supply certain price data used by Mirror, rather than relying on a third-party decentralized data 

feed for all of Mirror's price oracles. Additionally, KWON caused Terraform to secretly fund and 

operate trading bots on Minor (which Terraform referred to internally as "MM bots") to keep 

mAsset prices in line with the prices of the traditional assets they purportedly "mil1'ored," as 

opposed to relying on decentralized mru.·ket processes. In other words, Mirror's decentralized 

mechanism for keeping the price of mAssets pegged to their underlying traditional assets did not 

work, and so KWON used robotic accounts masquerading as users to manipulate m.Asset prices 

for the entire time Mirror operated. An intemal Terraform document explicitly outlined this 

process, explaining, among other things, how "MM bot is managing to bring the mAsset price 

within a set range by placing a counter order when the price is out of the range in Oracle," and that 

if the secret Terraform MM bots were not used then "the mAsset may be highly unlikely to track 

its underlying asset accurately." 

59. DO HYEONG KWON, the defendant, was never able to get Mirror to function in 

the decentralized fashion that he advertised. On or about August 9, 2021, approximately nine 

months after Mirror launched, KWON acknowledged to Terrafo1m Employee-3 that he was still 

seeking a "solution to arb[itrage] MAssets to oracle prices to minimize our need to have to conduct 

operations to the peg," i.e., to find a way to keep mAsset prices pegged to their "mirrored" 

traditional assets without Tenaform secretly funding and operating MM bots. KWON further 

stated to Terraform Employee-3 that "we need to be hands off on all terra side mirror operations 

46 



in a couple months." However, because of the ineffectiveness of Mirror's design, KWON 

continued secretly deploying the MM Bots and substantial capital to manjpulate mAssets through 

the crash of UST and LUNA in May 2022. 

60. DO HYEONG KWON, the defendant, used the Genesis Stablecoins to fund the 

MM bots and their manipulation of the mAsset market. In total, KWON used over $85 million 

worth of the Genesis Stablecoins in this manner to deceive investors about the decentralized 

operation of Mirror. 

Misl'epl'esentations About tile Extent of Mirror Usage 

61. DO I-IYEONG KWON, the defendant, caused Terraform to promote Mirror (and 

the Terra blockchain more broadly) based on metrics purporting to show Mirror' s widespread 

adoption by users, including (a) the total amount of collateral posted to mint mAssets; (b) the total 

amount of "liquidity" on Mirror, i.e., mAssets and UST available on Minor exchanges; (c) the 

total amount of staked MIR tokens; and (d) "Total Value Locked" (or "TVL") on Mirror, i.e. , the 

total combined amount of collateral, liquidity, and staked MIR tokens. For example: 

a. On or about December 15, 2020, less than two weeks after Mirror launched, 

KWON sent an email to investors stating that "Minor launch went very well - there is now lO0M 

USO in total value locked on mirror .... " 

b. On or about January 23, 2021, KWON tweeted about Mirror, in substance 

and in part, " l lM daily trading volume / 230M tvl in stock synthetics @mirror_protocol in 6 

weeks." 

c. On or about February 12, 2021, KWON tweeted about various Mirror 

metrics, including that Mirror had "TVL: 400M UST" and "mAsset Liquidity: 200M," and KWON 

concluded his tweet by writing "(Pats self on the back)." 

47 



d. On or about March 9, 2021, KWON tweeted, "Welcome @mirror_protocol 

to the lB TYL club." 

e. On OI about April 11, 2021, KWON tweeted about Minor having $1.8 

billion in TYL, stating, "1.8B TVL is offensive," i. e., that this amount was a very substantial 

quantity of TYL. 

f. On or about June 25, 2021, KWON caused the publication of an article on 

an online platform touting Mirror's widespread adoption by users, including claiming that in its 

first six months "Mirror crossed 2 billion in TVL and 1 billion in liquidity ... making Mirror a top 

15 DeFi protocol and leading cross-chain protocol." The aiticle included an image from Mirror's 

website illustrating these metrics, including tl1e chart depicted below showing that Minor at the 

time had neai·ly $2 billion in TYL, nearly $1 billion in liquidity, and over $800 million in collateral. 

62. However, in truth, DO HYEONG KWON, the defendant, caused Terraform to 

inflate key Mirror metrics to deceive investors about the extent of Mirror's adoption and 

decentralization. Specifically, KWON caused Terraform to engage in a significant amount of 

transactions on Miirnr using its own accounts in order to inflate collateral, liquidity, MIR staking, 

and TYL metrics. For example, Terraform's own accounts were responsible for almost all of the 

48 



collateral posted on Mirror in its first six months, and a substantial majority thereafter, as depicted 

in the chart below. 

'l'olal Collateral Mirror Protocol (USO) 

1000 M 

800 M 

Q) 

~ 600 M 

51 
::, 

100M 

200 M 

0ML-----.------,.------r----..-----,.----,----,----,--------' 
Jon-2021 Mar-2021 Moy-2021 Jul-2021 Sep-2021 Nov-2021 Jan-2022 Mor-2022 May-2022 

Collateral (TFL Addresses) Collateral (Non-TFL Addresses) 

Terrafonn's own accounts also accounted for up to approximately 40% of liquidity and up to 

approximately 60% ofTVL on Mirror, as depicted in the charts below . 

....----..::™=·'-==k"" v,i .. [TV!.) Mlm>r l'n>locd l]J~Dj, ___ __, 

1000 M 
IOOOM 

,oo,., 

I tOO ►l 
0 

IOOOM 

! 
~ 

Q 

~ 1000),t 

ilOGM 

lOOM 

When KWON caused Terraform to promote Mirror as achieving the milestone of having $1 billion 

in liquidity and $2 billion in TVL, Ten-aform's accounts were actually generating over $400 

million of that claimed liquidity and approximately $ 1 billion of that claimed TYL. 

49 



The Chai Misrepresentations 

Kwon Claimed Chai Used tlte Terra Blockcliain to Process Payments 

63. One of the principal ways that DO HYEONG KWON, the defendant, promoted 

the Tel1'a blockchain to investors was touting its "real-world" usage by the Korean payment 

application Chai beginning in or about June 2019. KWON claimed that Chai used a Terraform 

stablecoin pegged to the Korean Won called TerraKRW ("KRT"), which operated on the Terra 

blockchain using the same algorithmic mechanism as UST, to process transactions for millions of 

users and billions of dollars in transactions. This purportedly demonstrated the potential for 

widespread adoption of the Terra blockchain and the generation of significant transaction fees for 

investors who "staked" their LUNA tokens, i. e., locked up their LUNA tokens within the system. 

As discussed above, an increase in the number of transactio_ns on the Tel1'a blockchain would lead 

to greater rewards for LUNA investors who staked their tokens. 

64. DO HYEONG KWON, the defendant, used emails and public aiticles, among other 

means, to promote Chai to investors as a purported real-world application of the Terra blockchain. 

For example: 

a. On or about December 10, 2018, KWON caused a promotional email to be 

sent to investors stating that there was a need in the cryptocw-rency industry for "projects that 

achieve real world adoption beyond whitepapers and fluffy concepts." The email claimed that 

when Chai was launched, it would be "a product that is easy to integrate for e-commerce partners 

and seamless to use for consumers" because it would not require customers "to sign up for 

exchanges, manage wallets and store private keys," and that Terrafom1 would "separate the 

branding for the payment service with that of the underlying blockchain technology." 

50 



b. On about June 21, 201 9, KWON published an article touting how "75k 

unique shoppers" in Korea used Chai to make purchases w011h a total of 1.5 billion Korean won, 

and proclaiming that "Chai's launch is not only a victory for Terra but also for the blockchain 

industry as a whole." In the ru1icle, KWON stated "[ w ]eve been getting a lot of questions regarding 

how Chai uses Terra's blockchain," and the answer was that "[q]uite simply, Chai runs, records 

transactions, and manages account balances on Terra's Columbus mainnet." 

c. Later, on or about July 26, 201 9, KWON published a "Terra Community 

Update" referring to Chai as ''Terra' s blockchain-powered payments app" that would allow 

"anyone to easily buy their morning coffee with Terra," claiming that in the 

"40 days since Chai launched using the Terra Protocol" it was "already ... one of the most heavily 

used blockchain applications in existence." 

65 . DO HYEONG KWON, the defendant, publicly attributed Chai's commercial 

success at least in part to the Terra blockchain allowing Chai to operate at lower costs and higher 

speeds than Chai's competitors. For example: 

a. On or about October 14, 2019, KWON represented in a CNBC presentation 

that "Chai's unique value proposition is enabled by Terra's cutting-edge blockchain technology," 

51 



as depicted in the image below: 

~ C O ii youtub1.com/w•lch?v•1<iGalxADnbc 

- D VouTube l tfrl luna p,o,notlonal vldto 

CHAI 's unique value proposition is enjbled by 
Terra's cutting-edge blockchain technology 

... 

, 4,I06vltw1 Ott 14, 2019 
W11ct1 Tt111'1 Co-FounCtr 00 Kwen tJpl1ln how Koru wfl $00n run on Ttrrt't blo(~(ha,n p1ymtn11 rt•lWorlc Thi, p1eun1ttlon wo ol,,tn 111 five '1ltnlft0 ot CNBC Crypto T,11:M, In ~toul South 
Ko:ci. 

b. KWON caused Terraform to publish an article on or about October 24, 2019 

claiming that "CHAI utilizes Terra's blockchain and stablecoin economy to offer lower transaction 

fees and fund ongoing discounts." The article asserted that "[w]hile most merchants pay about 

2.5% ~ 3% as transaction fees we replace the complicated value chain with a single blockchain 

layer to offer rates as low as 0.5%. Assuming that we've saved at least 1.5% on transaction fees 

for our partners, we can estimate our current savings to be $810,000." 

c. On or about November 22, 2019, KWON sent an email to a U.S. investor 

attaching a Chai promotional document stating that "CHAI ' s unique value proposition is enabled 

52 



by Terra's cutting-edge blockchain technology," and that "CHAI's transactions are facilitated by 

a fully collateralized stablecoin that maintains price stability via a protocol that dynamically 

adjusts money supply." The promotional document included the fo llowing graphic demonstrating 

how Chai purportedly used the Terra blockchain to settle transactions rather than traditional 

payment processing mechanisms: 

CHAI delivers a low processing fee 
by replacing the cluttered payment value chain 
with a single blockchain layer 

USER 

MERCHANT 
PLATFORM 

Kwon Falsified Data to Fraudulently Claim that Cltai 
Processed Transactions on tlte Terra Blockchabt 

USER 

MERCHANT 
PLATFORM 

.. 

66. In truth, Chai processed transactions through traditional payment rails operated by 

established financial institutions, not the Terra blockchain. DO HYEONG KWON, the defendant) 

configured Chai to use traditional bank rails rather than the Terra blockchain due to regulations 

concerning electronjc-payment businesses in South Korea. At the time of Chai's launch, KWON 

understood that South Korean financial regulators were not prepared to issue electronic-payment 

licenses to companies that used cryptocurrency or other blockchain technology to process 

payments. In order to obtain such licenses, KWON arranged for Chai to use traditional bank rails 

53 



to process payments, and not cryptocw-rency or other blockchain technology. 

67. Despite knowing that Chai used traditional bank rails to process its trnnsactions, 

DO HYEONG KWON, the defendant, nonetheless fraudulently promoted Chai to investors in the 

United States and other locations as using blockchain technology to process payments. KWON 

sought to deceive investors in this maimer because being truthful with investors about Chai's use 

of traditional bank rails would have undermined one of the principal talking points that KWON 

used to distinguish his business from competitors and raise capital. As discussed above, KWON 

touted Chai's purported use of the Terra block.chain to process transactions as a key vehicle for 

increasing the nwnber of stabl.ecoin transactions on the Terra block.chain, and thus generating 

higher rewards for investors who staked LUNA tokens. Especially in Terrafonn's early years, 

KWON viewed Chai's generation of transaction fees for LUNA stakers as critical to the success 

ofTen-aform's business. KWON worried that a low volume ofblockchain transactions (and thus 

low staking rewards) would result in investors selling rather than staking their LUNA tokens, 

creating a glut of LUNA in the market and driving down its price. 

68. Indeed, in the month before Chai launched, DO HYEONG KWON, the defendant, 

was so concerned about the need to generate transaction fees for LUNA stakers at that time that 

he contemplated an interim scheme to fake Terra block.chain transactions whHe he was preparing 

to launch Chaj , KWON discussed this interim scheme with the Co-Founder on an electronic 

communication platform on or about May 9, 2019. In that discussion, KWON wrote a message to 

the Co-Founder asking whether he should "do fake transactions" on the Terra blockchain "to 

generate staking returns" that could be funded by the Genesis Stablecoins. The Co-Founder 

expressed that "we probably need a story" as to the source of the fake blockchain transactions. 

KWON later wrote to the Co-Founder that "i can just create fake transactions that look real ... 

54 



which will generate fees ... and we can wind that down as chai" grows." When the Co-Founder 

responded by expressing concern that users and investors would "find out it's fake;" KWON 

replied, " [a]ll the power to those that can prove its fake ... because i will try my best to make it 

indiscemabJe .. . i wont tell if you wont ® " The Co-Founder then stated; "Haha ... Well let's 

test in small scale and see what happens Q " 

69. Once Chai launched in or about June 2019, DO HYEONG KWON, the defendant, 

and his co-conspirators "rni1Tored" Chai transactions on the Terra blockchain through an 

automated process to create the illusion for investors in the United States and other locations that 

Chai processed transactions thJOugh the Tena blockchain. KWON initially engineered these fake 

blockchain transactions by transferring small amounts of stablecoins between wallets that he 

controlled. Over time, he caused the implementation of more sophisticated methods of fabricating 

Chai transaction data on the Te1rn blockchain, such as faking patterns of transactions designed to 

make some wallets appear to belong to sellers and others appear to belong to buyers. KWON used 

over $60 million worth of the Genesis Stablecoins to fund these fraudulent efforts. 

70. DO HYEONG KWON, the defendant, and others acting at his direction, sought to 

suppress public reporting about Chai's use of traditional bank rails to process payments. For 

example, after a Korean-language news website published an article on or about June 16, 2019 

reporting that Chai did not use stablecoins due to South Korea financial laws and regulations, a 

TetTaform employee ("Terraform Employee-4"), acting at the direction of KWON, sought to have 

an editor at the news website revise portions of the article. On or about June 18, 2019, Terrafom1 

Employee-4 infom1ed KWON that the editor stood behind the accuracy of the article since Chai 

did not have "a direct connection to stablecoins." Terraform Employee-4 further informed KWON 

that the editor "understands that we wish to soften the language at the very least, but she is not 

55 



willing to," and "[g]iven that [the editor] even hinted that she knows we chose this path due to reg 

risks, I think we should let it be." 

71. Terraform and Chai Co. employees discussed the fabrication of Terra blockchain 

data to mirror Chai transactions with DO HYEONG KWON, the defendant. For example, in one 

email in or about May 2020, a Chai Co. employee emailed with KWON and others about how to 

implement transaction processing for another payment application that purportedly used the Terra 

blockchain (a payment service in Mongolia called memePay), asking whether they should "follow 

the same structure as Chai to process transaction outside blockchain ... But write a record on 

Terra block.chain in parallel." A Ten-aform employee responded, "I thinking copying Chai 

structure would be the best choice for now." 

Lies to South Korean Regulatots 

72. DO HYEONG KWON, the defendant, worried that South Korean financial 

regulators would learn about the steps he had taken to deceive investors about Chai's use of the 

Terra block chain, including the creation of financial and technological connections between Chai 

and Ten-afo1m (such as the mirroring of Chai transactions on the Terra blockchain) to create the 

illusion that Chai was a blockchain-based payments system. As a result KWON and his 

subordinates at Terraform took steps to hide those deceptive acts from regulators. For example, 

on or about March 28, 2019, KWON instructed Terraform employees working on blockchain 

projects not to come into Terraform' s office when South Korean financial regulators conducted an 

in-person inspection relating to Chai's application for financial licenses, and Terrafonn's Chief 

Information Security Officer directed employees that "when you leave the office later today, please 

remove any items and interior decorations related to Terra so that they are not visible" when 

56 



regulators were present. 1 

73. At the same time that DO HYEONG KWON, the defendant, sought to hide any 

business connections between Chai and Ten-aform from South Korean regulators, KWON touted 

such connections to investors to promote the lie that Chai used the Terra blockchain to process 

payments. For example, on or about April 10, 2019, KWON caused an email to be sent to investors 

touting how South Korean regulators had granted electronic payment licenses to Chai, that " [t]hese 

licenses are necessary for any payment gateway facilitating the settlement of users' funds," and 

that Chai was the "1st crypto firm ... to be granted these licenses" which "demonstrates Chai's 

unique ability to navigate difficult regulatory waters." Shortly after that promotional email to 

investors was sent, Terraform employees expressed concem through an internal Tenaform 

messaging platform that South Korean regulators would learn about the email, with Terraform 

Employee-4 noting, "Ugh a foreign investor said they will promote this on their [social media] 

channel," and other employees responding "No! That cannot happen!! l ! ! ! Oh my god!!!!!" and "I 

pray I pray for that to please not happen," among other things. Terraform Employee-4 then 

expressed hope that the substance of the promotional email would not ultimately reach South 

Korean regulators because the foreign investor who planned to publicize the promotional email 

was not in South Korea, stating, "(t]here shoul.dn 't be any big issues since the investor is an Italian, 

. h ,, s1g .... 

74. In sum, DO HYEONG KWON, the defendant, advanced conflicting narratives 

about Chai depending on his audience, and in the process told different lies to investors, business 

partners, and regulators. Terra.form employees repeatedly expressed concerns within the company 

about these false and conflicting statements. For example, Tenaform Employee-4 raised concerns 

1 These quotations, and those in Paragraph 73 of this Indictment, are translations of the original 
Korean language communications. 

57 



with the Co-Founder about publicizing :financial connections between Terraform and Chai with 

reporters, sending a message to the Co-Founder on or about June 13, 2019 that "my dilemma is 

that [at the moment], as Do pointed out, we are not being honest with the media," and that if 

Tenaform disclosed certain financial payments to Chai, "we'd be put in an awkward situation 

where we have lied to the banks, to whom we promised both verbally and in writing that CHAI 

has nothing to do with Terra/cryptocurrency." 

The Separation of Terraform aml Chai and the ''Look the Other Way" Agreement 

75. lo or about March 2020, DO HYEONG KWON, the defendant, and the Co-Founder 

separated the business operations ofTerraform and Chai Co. KWON sent an email to Tenaform 

employees on or about March 2, 2020 explaining that the split was the product of "the tension 

between Terra's mandate to challenge the boundaries of traditional finance, and Chai's need to be 

fully compliant with existing regulations as a licensed entity." KWON further explained that 

"[p)ost split, Chai will double down on growing as a successful payments company within the 

botmds ofregulatory tolerance," and that "[m]uch of that will have nothing to do with Terra" with 

the exception of Chai "facilitate[ing] direct Terra topups," i.e., loading tokens to a cryptocurrency 

wallet. In other words, KWON acknowledged in an internal Tenafonn email that, at least as of 

March 2020, Chai's only relationship to the Terra blockchain would be serving as a means of 

funding cryptocunency wallets, and that Chai would not process transactions through the Terra 

blockchain. 

76. But after Terraform and Chai Co. separated, DO HYEONG KWON, the defendant, 

sought to ensure that he could continue to fraudulently represent Chai transactions as taking place 

on the Terra blockchain. KWON inWally sent a wr.itten proposal to the Co-Founder stating "I ask 

that Terra be able to continue public representation of Chai transaction volumes as its own over 

58 



the next two years, and that Chai continue to support that nanative unless materially unfavorable 

to do so." KWON eventually secured a written agreement from the Co-Founder on or about 

October 27, 2020 that Terraform would have the right for three years to "represent Chai Wallet as 

a DApp [decentralized application] on Terra' s blockchain," and that Chai Co. would "not 

contradict, or make any independent representations which would otherwise contradict, such 

representations made by Terra in respect thereof." After the agreement was signed, KWON 

continued to make public misrepresentations about Cha.i's use of the Terra blockchain, and the Co­

Founder subsequently explained to another Chai Co. executive that he had a "look the other way" 

agreement concerning KWON's misrepresentations about Chai using the Te1rn blockchain. 

77. After Terrafom1 and Chai Co. separated, and a Chai Co. executive expressed 

concern to the Co-Founder during a recorded conversation about the "fraudulent" nanative that 

Chai used the Terra blockchain to process transactions, the Co-Founder responded by stating, in 

substance and in pa1t, "it does bother me somewhat morally that the narrative is off. But that's not 

- I don't think [it's] your problem, and I think it's not necessarily my problem either. I think it's 

Do [Kwon]'s problem." When the other Chai Co. executive reiterated that "there is no 

involvement of actual Terra stable coins in Chai," the Co-Founder responded, "Yeah, but why 

does that matter?" 

78. DO HYEONG KWON, continued making misrepresentations about Chai's use of 

the Terra blockchain in in 2021 and 2022. For example, in a podcast titled "Exponential View" 

that was distributed on or about January 12, 2022, KWON stated about Chai, "the value proposition 

as you said is pretty simple, the idea is that instead of having to wait multiple days and have to pay 

egregious fees in order to get your settlement through ... merchants can get settled very quickly 

so instead of multiple days it could be say 6 seconds which is the average block time of the tena 

59 



blockchain, and then the fees are also structurally much lower, I think about 50 to 60% what 

merchants are forced to pay on net using traditional payment gateways." 

The Genesis Coin Misrepresentations 

Background on the Ge1tesis Stablecoins 

79. DO HYEONG KWON, the defendant, publicly raised questions about whether it 

was fail' and appropriate for cryptocurrency developers to "pre-mine" their tokens for their own 

benefit, i.e., creating or "mining" a quantity of tokens for their own benefit before offering tokens 

to the public. In the October 2021 Unconfirmed Pod cast, KWON spoke about potential regulations 

for cryptocurrencies, such as "things like having no pre-mine of the asset, so fairly distributing the 

asset at launch." KWON also suggested that a cryptocw-rency pre-mine was an "unfair advantage" 

over investors that could result in a token being considered a secmity, stating: "I feel like if there's 

no pre-mine to the asset in the sense that the developer doesn't have an unfair advantage when the 

asset is issued, then it cannot be a secmity ... . It seems like a pretty good reason you shouldn't 

have any financial responsibility if you didn't have any unfair financial gains." 

80. However, as discussed above, DO HYEONG KWON, the defendant, programmed 

the Terra blockchain at its creation in or about 2018 to include pre-mined tokens which he used 

for his own pmposes and benefit. Specifically, KWON programmed the Terra blockchain to 

include one billion stablecoins (the Genesis Stablecoins) and one billion LUNA The Genesis 

Stablecoins consisted of a Terraform stablecoin called TerraSDR (abbreviated as SDT), which was 

pegged to a financial unit used by the International Monetary Fund called Special Drawing Rights 

or "SDR," that is based on a basket of five currencies (the U.S. dollar, the Euro, the Chinese 

Remminbi, the Japanese Yen, and the British Pound Sterling). SDT was not a widely used or 

traded stablecoin on public cryptocurrency exchanges. KWON programmed the Terra blockchain 

60to make 10% of the Genesis Stablecoins available to Terraform each year, i.e., to "unlock" 100 

million SDT on an annual basis. Terraform ultimately received a total of 300 million of the 

Genesis Stablecoins before a Terra blockchain governance vote was held in or about late 2021 to 

"burn" the remainder of the Genesis Stablecoins. 

Kwon Provides Limited, SltifUng, aml Knowingly False Disclosures 

81. DO HYEONG KWON, the defendant, provided limited, shifting, and knowingly 

false disclosures about the Genesis Stablecoins to his investors. 

82. Ea:rly Terrafo1m promotional materials such as the 2018 Private Offering 

Document represented that the "primary" use of the Genesis Stablecoins would be to fund 

ecommerce discounts for business pa1tners, distribute free tokens to existing users to promote 

Terraform's business (known as "airdrops"), and grow the Terra "ecosystem" (a term used by 

KWON to refer to the universe of products and systems that operated on the Tell'a blockchain). 

83. After Terraforrn conducted its initial seed rounds of investor fundraising in 2018, 

DO HYEONG KWON, the defendant, generally did not include disclosures about the Genesis 

Stablecoins in Terraform's promotional materials. Still, between 2019 and 2021, KWON made, 

and caused to be made, occasional statements on social media platforms and internet message 

boards about the Genesis Stablecoins, including in response to questions from users who 

discovered the Genesis Stablecoins on the Terra blockchain and inquired about their pw·pose. In 

these statements, KWON repeatedly changed his explanation for the purpose and use of the 

Genesis Stableco.ins. For example: 

a. In June 2019, after a user observed on social media that that they had located 

a wallet on the Terra blockchain holding the Genesis Stablecoins and asked about their purpose, 

KWON responded that the Genesis Stablecoins would be used "to engage in Luna <> Terra swaps 

61 



to stabilize pegs." 

b. In January 2020, KWON provided another explanation: the Genesis 

Stablecoins were being used to supply stablecoins to Chai "whenever they run out ofTe1Ta tokens 

to provide to new users." 

c. In November 2021, KWON posted on a public message board that he had 

used the Genesis Stablecoins to mint other Terra stablecoins "when the cost of minting have been 

prohibitively high to do Luna<->stablecoin swaps." KWON represented in the post that, out of 

the 300 million of the Genesis Stablecoins had been released to Terrafonn through the annual 

"unlocking" process, approximately 100 million had been used to mint KRT "mainly used to 

facilitate transactions for Chai" and that approximately 180 million had been used to mint UST 

"to provide liquidity" in various decentralized cryptocurrency exchanges. 

84. In truth, DO HYEONG KWON, the defendant, did not use the Genesis Stablecoins 

solely for the purposes set forth in even his limited and shifting disclosures to investors. Instead, 

as djscussed above, KWON used at least $145 million wo1ih of the Genesis Stablecoins for 

fraudulent purposes. The Genesis Stablecoins were not "mainly used to facilitate transactions for 

Chai," but rather, as discussed above, to fake Chai transactions on the Terra blockchain. The 

Genesis Stablecoins were also not used simply to "provide liquidity" on decentralized exchanges, 

but rather, as discussed above, to fund trading bots that manipulated the price of rnAssets because 

Mirror did not function as advertised. 

85. In swu, DO HYEONG KWON, the defendant, used substantial amounts of the 

Genesis Stablecoins as a slush fund to finance fraudulent activities designed to create the false 

appearance of widespread adoption of the Terra blockchain and the decentralization ofTerraform 

products. 

62 



COUNT ONE 
(Conspiracy to Defraud) 

86. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, and others known 

and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and 

with each other to commit offenses against the United States, to wit, (a) commodities fraud, in 

violation of Title 7, United States Code, Sections 9(1) and 13(a)(5) and Title 17, Code of Federal 

Regulations, Section 180.1; (b) securities fraud, in violation of Title 15, United States Code, 

Sections 78j(b) and 78ff and Title 17, Code of Federal Regulations, Section 240.1 0b-5; and (c) 

wire fraud, in violation of Title 18, United States Code, Section 1343, to wit, KWON agreed with 

others to defraud individuals selling digital commodities in exchange for cryptocurrencies issued 

by Terraform, including LUNA and UST, by deceiving those individuals about products, systems, 

and entities that operated (or purported to operate) on or in connection with the Terra blockchain, 

including Chai, Minor, the Genesis Stablecoins, and the LFG. 

87. It was a part and object of the conspiracy that DO I-IYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indirectly, used 

and employed, and attempted to use and employ, in connection with a swap, a contract of sale of 

a commodity in .interstate and foreign commerce, and for future delivery on and subject to the rnles 

of a registered entity, a manipulative and deceptive device and contrivance, in contravention of 

Title 17, Code of Federal Regulations, Section 180.1, by: (1) using and employing, and attempting 

to use and employ, a manipulative device, scheme, and artifice to defraud; (2) making, and 

attempting to make, untrne and misleading statements of material fact and omitting to state 

material facts necessary in order to make the statements made not untrue or misleading; and 

(3) engaging, and attempting to engage in acts, practices, and cow-ses of business which operated 

63 



and would operate as a fraud and deceit upon other persons, in violation of Title 7, United States 

Code, Sections 9(1 ) and 13(a)(5). 

88. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indirectly, by 

use of the means and instrumentalities of interstate commerce, and of the mails and of the facilities 

of national secmities exchanges, used and employed, in connection with the purchase and sale of 

securities, manipulative and deceptive devices and contrivances, in violation of Title 17, Code of 

Federal Regulations, Section 240.l0b-5, by: (a) employing devices, schemes, and artifices to 

defraud; (b) making untrue statements of material fact and omitting to state mater ial facts 

necessary in order to mak.e the statements made, in the light of the circumstances under which they 

were made, not misleading; and (c) engaging in acts, practices, and courses of business which 

operated and would operate as a fraud and deceit upon persons, in violation of Title 15, United 

States Code, Sections 78j(b) and 78ff. 

89. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, knowingly having devised and intending to devise a 

scheme and artifice to defraud, and for obtaining money and property by means of false and 

fraudulent pretenses, representations, and promises, would and did transmit and cause to be 

transmitted by means of wire, radio, and television communication in interstate and foreign 

commerce, writings, signs, signals, pictures, and sounds for the pwpose of executing such scheme 

and artifice, in violation of Title 18, United States Code, Section 1343. 

Overt Acts 

90. In furtherance of the conspiracy and to effect the illegal objects thereof, the 

following overt acts, among others, were committed in the Southern District of New York and 

64 



elsewhere: 

a. DO HYEONG KWON, the defendant, distributed the 2018 Private Offering 

Document representing that the "primary" use of the Genesis Stablecoins would be to fund 

ecommerce discounts for business partners, distribute free tokens to existing users to promote 

Terraform's business, and grow the Terra "ecosystem." 

b. Between in or about 2019 and in or about 2022, KWON used millions of 

dollars' worth of Genesis StabJecoins to fund fake Chai transactions on the Terra blockchain. 

c. On or about October 12, 2020, KWON sent an email to a representative of 

an investment firm based in New York containing a Terraform promotional document falsely 

claiming that Chai used the Terra blockchain to settle transactions rather than traditional payment 

processing mechanisms. 

d. On or about October 14, 2019, KWON made a false and misleading 

statement during a CNB C presentation transmitted to, among other places, the Southern District 

of New York, about Chai's usage of the Tena blockchain. 

e. On or about November 22, 2019, KWON sent an email to a U.S. investor 

attaching a Chai promotional document that included a false and misleading statement about Chai 

using the Tena blockchain to process transactions, including the statement that "CHAI's unique 

value proposition is enabled by Terra's cutting-edge blockchain technology," and that "CHAI's 

transactions are facilitated by a fully collateralized stablecoin that maintains price stability via a 

protocol that dynan1ically adjusts money supply." 

f. On or about December 3, 2020, KWON posted false and misleading public 

statements on Twitter about Mirror, including that "Mirror is entirely decentralized from day l " 

and "TFL has no special owner / operator keys." 

65 



g. On or about December 3, 2020, KWON caused Terraform to issue a false 

and misleading press release claiming that Mirror "is decentralized from day 1," that Terraform 

held no MIR tokens, and that "[t)here are also no admin keys or special access privileges granted." 

h. Between in or about 2020 and in or about 2022, KWON used Genesis 

Stablecoins to fund trading bots that manipulated the price of mAssets. 

1. On or about January 11 , 2021, KWON made false and misleading 

statements on a podcast about Minor that were transmitted to, among other places, the Southern 

District of New York, including assertions that neither he nor Terraform possessed any MIR 

tokens "[a]nd we have no governance rights as a consequence of that .. .. The way that I think 

about it is, at this point, we don't control or own any portions of the Mirror protocol." 

J. On or about August 9, 2021, KWON sent a message to Terra.form 

Employee-3 about trying to find a "solution to arb[itrage] MAssets to oracle prices to minimize 

ow- need to have to conduct operations to the peg." 

k. On or about January 19, 2022, KWON caused Tell'aform to issue a false 

and misleading tweet asserting that "[t]he LFG is governed independently by an international 

Council of industry leaders and experts .... " 

1. On or about January 19, 2022, KWON issued a false and misleading tweet 

that the LFG would serve as "a counterweight to TFL [Terraform] in the @tena_money 

ecosystem" and that "( d]ecentralization wins." 

m. In a podcast interview that was distributed on or about March 29, 2022, 

KWON falsely stated that the approximately $3 billion worth of bitcoi.i1 held in the LFG Reserve 

at the time was held by the LFG Governing Council in secure multisig wallets. 

66 



n. On or about November 16, 2022, KWON caused the distribution of an audit 

repo1t that sought to obscure and hide the fact that KWON had retroactively shifted hundreds of 

millions of dollars in trading losses from Terraform to the LFG to provide an excuse for Terraform 

to keep substantial. amounts of the LFG's assets, used funds from the LFG Reserve in ways that 

substantially benefited himself, and lied to investors about the LFG's independence and 

governance. 

(Title 18, United States Code, Section 371.) 

COUNT TWO 
(Commodities Fraud) 

The Grand Jury further charges: 

91. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set fotth herein. 

92. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, used and employed, and attempted to use and employ, in 

connection with a swap, a contract of sale of a commodity in interstate commerce, and for futw-e 

delivery on and subject to the rules of a registered entity, a manipulative and deceptive device and 

contrivance, in contravention of Title 17, Code of Federal Regulations, Section 180.1, by: (]) using 

and employing, and attempting to use and employ, a manipulative device, scheme, and artifice to 

defraud; (2) making, and attempting to make, an untrne and misleading statement of material fact 

and omitting to state a material fact necessary in order to make the statements made not untrue and 

misleading; and (3) engaging, and attempting to engage in an act, practice, and course of business 

which operated and would operate as a fraud and deceit upon a person, to wit, KWON engaged in 

a scheme to defraud individuals selling digital commodities in exchange for cryptocunencies 

67 



issued by Terraform, including LUNA and UST, by deceiving those individuals about products, 

systems, and entities that operated (or purported to operate) on or in connection with the Terra 

blockchain, including Chai, Min-or, the Genesis Stablecoins, and the LFG. 

(Title 7, United States Code, Sections 9(1) and 13(a)(5), and Title 17, Code of Federal 
Regulations, Section 180.1; Title 18, United States Code, Section 2.) 

COUNT THREE 
(Securities Fraud) 

The Grand Jury further charges: 

93. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set fo1th herein. 

94. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, by use of a means and instrumentality of interstate commerce 

and of the mails, and a facility of a national secw-ities exchange, used and employed, in connection 

with th.e purchase and sale of a security, a manipulative and deceptive device and contrivance, in 

violation of Title 17, Code of Federal Regulations, Section 240.l0b-5, by (a) employing a device, 

scheme, and aitifice to defraud; (b) making an untrue statement of material fact and omitt ing to 

state a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and ( c) engaging in an act, practice, and course of 

business which operated and would operate as a fraud and deceit upon a person, to wit, KWON 

engaged in a scheme to defraud individuals purchasing digital securities issued by Tenafonn , 

including LUNA, by deceiving those individuals about products, systems, and entities that 

68 



operated (or purported to operate) on or in co1mection with the Tena blockchain, including Chai, 

Mirror, the Genesis Stablecoins, and the LFG. 

(Title 15, United States Code, Sections 78j(b) & 78ff; Title 17, Code of Federal Regulations, 
Section 240. l0b-5; Title 18, United States Code, Section 2.) 

COUNT FOUR 
(Wire Fraud) 

The Grand Jury further charges: 

95. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

96. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, lmowingly having 

devised and intending to devise a scheme and aitifice to defraud, and for obtaining money and 

property by means of false and fraudulent pretenses, representations and promises, transmitted and 

caused to be transmitted by means of wire, radio, and television communication in interstate and 

foreign commerce, writings, signs, signals, pictures, and sounds for the purpose of executing such 

scheme and artifice, to wit, KWON, along with others, engaged in a scheme to defraud purchasers 

of cryptocurrencies issued by Ten-aform, including LUNA and UST, by deceiving those 

individuals about products, systems, and entities that operated (or purported to operate) on or in 

c01mection with the Ten-a blockchain, including Chai, Mirror, the Genesis Stablecoins, and ·the 

LFG, and transmitted electronic communications to the Southern District of New York in 

fu1therance of that scheme. 

(Title 18, United States Code, Sections 1343 and 2.) 

69 



COUNT FIVE 
(Conspiracy to Defraud and Engage In Market Manipulation) 

The Grand Jury further charges: 

97. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if ful ly set forth herein. 

98. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, and others known 

and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and 

with each other to commit offenses against the United States, to wit, (a) commodities fraud, in 

violation of Title 7, United States Code, Sections 9(1) and 13(a)(5) and Title 17, Code of Federal 

Reg1.1lations, Section 180.1; (b) securities fraud, in violation of Title 15, United States Code, 

Sections 78j(b) and 78ff and Title 17, Code of Federal Regulations, Section 240.l Ob-5; (c) wire 

fraud, in violation of Title 18, United States Code, Section 1343; and (d) securities manipulation, 

in violation of Title 15, United States Code, Sections 78i(a)(2) and 78ff, to wit, KWON agreed 

with others to defraud purchasers of cryptocurrencies issued by Terra.form, by deceiving those 

purchasers about the means by which Terra.form sought to maintain UST's $1 peg, and the 

effectiveness of the Terra Protocol, through false statements and market manipulation. 

99. lt was a part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, wil.lfolly and knowingly, directly and indirectly, used 

and employed, and attempted to use and employ, in connection with a swap, a contract of sale of 

a commodity in interstate and foreign commerce, and for future delivery on and subject to the rnles 

of a registered entity, a manipulative and deceptive device and contrivance, in contravention of 

Title 17, Code of Federal Regulations, Section 180.1 , by: (1) using and employing, and attempting 

to use and employ, a manipulative device, scheme, and artifice to defraud; (2) making, and 

70 



attempting to make, untrue and misleading statements of material fact and omitting to state 

material facts necessary in order to make the statements made not untrue or misleading; and (3) 

engaging, and attempting to engage in acts, practices, and courses of business which operated and 

would operate as a fraud and deceit upon other persons, in violation of in violation of Title 7, 

United States Code, Sections 9(1) and 13(a)(5). 

l 00. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indirectly, by 

use of the means and instrumentalities of interstate commerce, and of the mails and of the facilities 

of national securities exchanges, used and employed, in connection with the purchase and sale of 

secUJities, manipulative and deceptive devices and contrivances, in violation of Title 17, Code of 

Federal Reg11lations, Section 240.1 0b-5, by: (a) employing devices, schemes, and artifices to 

defraud; (b) making untrue statements of material fact and omitting to state material facts 

necessary in order to make the statements made, in the light of the circumstances under which they 

were made, not misleading; and ( c) engaging in acts, practices, and courses of business which 

operated and would operate as a fraud and deceit upon persons, in violation of Title 15, United 

States Code, Sections 78j(b) and 78ff. 

101. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, knowingly having devised and intending to devise a 

scheme and artifice to defraud, and for obtaining money and property by means of false and 

fraudulent pretenses, representations, and promises, would and did transmit and cause to be 

transmitted by means of wire, radio, and television communication in interstate and foreign 

commerce, writings, signs, signals, pictm·es, and sounds for the purpose of executing such scheme 

and artifice, in violation of Title 18, United States Code, Section 1343. 

71 



102. It was a further pa1i and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indfrectly, by 

the use of the mails and means and instrumentalities of interstate commerce, and of the facilities 

of national securities exchanges, and being a member of national securities exchanges, effected, 

alone and with one and more other persons, a series of transactions in securities registered on 

national securities exchanges, securities not so registered, and in connection with secw·ity-based 

swaps and security-based swap agreements with respect to such securities creating actual and 

apparent active trading in such secw-ities, and raising and depressing the price of such seclU'ities, 

for the purpose of inducing the purchase and sale of such securities by others, in violation of Title 

15, Unjted States Code, Sections 78i(a)(2) and 78ff. 

Overt Acts 

103. In furtherance of the conspiracy and to effect the illegal objects thereof, the 

following overt acts, among others, were committed in the Southern District of New York and 

elsewhere: 

a. In or about May 2021, DO HYEONG KWON, the defendant, and Trading 

Firm Executive-1 communicated by electronic means about altering the market price of UST. 

b. In or about May 2021, the Trading Firm deployed trading strategies 

designed to alter the market price of UST. 

c. On or about May 23, 2021, KWON agreed with the Trading Firm to modify 

an existing loan between Terraform and the Trading Firm to compensate the Trading Finn for its 

assistance in seeking to alter the market price of UST. 

d. On or about May 24, 2021 , KWON caused a Tenaform social media 

account to issue a false and misleading statement concerning the effectiveness and sustainability 

72 



of the Terra Protocol. 

e. On or about October 4, 2021 , KWON made a false and misleading 

statement in an interview transmitted to, among other places, the Southern District of New York, 

that "there's like a number of large market makers that participate in stabilizing the peg of UST" 

but that "[m]ost of them - - I don't think any of them have a contractual relationship with 

[Tenaform]. It's just something that they do because they feel like they can make money out of 

it .... " 

f. On or about March 1, 2022, in the course of an interview on an audio talk 

show, KWON made a false and misleading statement concerning the effectiveness and 

sustainability of the Terra Protocol. 

(Title 18, United States Code, Section 371.) 

COUNT SIX 
(Commodities Fraud) 

The Grand Jury further charges: 

104. The allegations contained in Paragraphs 1 tluough 85 ofthis Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

105. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, used and employed, and attempted to use and employ, in 

connection with a swap, a contract of sale of a commodity in interstate commerce, and for future 

delivery on and subject to the rules of a registered entity, a manipulative and· deceptive device and 

contrivance, in contravention of Title 17, Code of Federal Regulations, Section 180.1, by: (1) using 

and employing, and attempting to use and employ, a manipulative device, scheme, and artifice to 

defraud; (2) making, and attempting to make, an untrue and misleading statement of material fact 

73 



and omitting to state a material fact necessary in order to make the statements made not untrue and 

misleading; and (3) engaging, and attempting to engage in an act, practice, and comse of business 

whjch operated and would operate as a fraud and deceit upon a person, to wit, KWON engaged in 

a scheme to defraud individuals selling digital commodities for cryptocunencies issued by 

Terraform, including LUNA and UST, by using market manipulation and fa lse statements to 

deceive those individuals about the means by which Terraform maintained, and sought to maintain, 

US T's $1 peg, and the effectiveness of the Terra Protocol. 

(Title 7, United States Code, Sections 9(1) and 13(a)(5), and Title 17, Code of Federal 
Regulations, Section 180.l; Title 18, United States Code, Section 2.) 

COUNT SEVEN 
(Securities Fraud) 

The Grand Jury further charges: 

106. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

107. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, by use of a means and instrumentality of interstate commerce 

and of the mails, and a facility of a national securities exchange, used and employed, in com1ectio11 

with the purchase and sale of a security, a manipulative and deceptive device and contrivance, in 

violation of Title 17, Code of Federal Regulations, Section 240.l0b-5, by (a) employing a device, 

scheme, and artifice to defraud; (b) making an untrue statement of material fact and omitting to 

state a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and ( c) engaging in an act, practice, and course of 

business which operated and would operate as a fraud and deceit upon a person, to wit, KWON 

74 



engaged in a scheme to defraud individuals purchasing digital securities issued by Tel1'aform, 

including LUNA, by using market manipulation and false statements to deceive those individuals 

about the means by which Terrafonn maintained, and sought to maintain, UST's $1 peg, and the 

effectiveness of the Terra Protocol. 

(Title 15, United States Code, Sections 78j(b) & 78ff; Title 17, Code of Federal Regulations, 
Section 240.l0b-5; Title 18, United States Code, Section 2.) 

COUNT EIGHT 
(Wire Fraud) 

The Grand Jury further charges: 

108. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set fo11h herein. 

109. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, knowingly having 

devised and intending to devise a scheme and artifice to defraud, and for obtaining money and 

property by means of false and fraudulent pretenses, representations and promises, transmitted and 

caused to be transmitted by means of wire, radio, and television communication in interstate and 

foreign commerce, writings, signs, signals, pictures, and sounds for the purpose of executing such 

scheme and aiiifice, to wit, KWON, along with others, engaged in a scheme to defraud purchasers 

of cryptocurrencies issued by Terraform, including LUNA and UST, by deceiving those 

individuals about the means by which Terraform maintained, and sought to maintain, UST's $1 

peg, and the effectiveness of the Terra Protocol, and transmitted electronic communications to the 

Southern District of New York in furtherance of that scheme. 

(Title 18, United States Code, Sections 1343 and 2.) 

75 



COUNT NINE 
(Money Laundering Conspiracy) 

The GTand Jury further charges: 

I 10. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

111. From at least in or about 2022, up to and including in or about April 2024, in the 

Southern District of New York and elsewhere, DO HYEONG KWON, the defendant, and others 

known and unknown, willfully and knowingly combined, conspired, confederated, and agreed 

together and with each other to commit money laundering, in violation Title 18, United States 

Code, Sections 1956(a)(l )(B)(i) and l 957(a). 

112. It was a pa.it and an object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unlrnown, knowing that the property involved in certain financial 

transactions represented the proceeds of some form of unlawful activity, would and did conduct 

and attempt to conduct such financial transactions, which transactions affected interstate and 

foreign commerce and involved the use of a financial institution which was engaged in, and the 

activities of which affected, interstate and foreign commerce, and which in fact involved the 

proceeds of specified unlawful activity, to wit, wire fraud, in violation of Title 18, United States 

Code, Section 1343, and securities fraud, in violation of Title 15, United States Code, Sections 

78j(b) and 78ff and Title 17, Code of Federal Regulations, Section 240. l0b-5, knowing that the 

transactions were designed in whole and in part to conceal and disguise the nature, location, source, 

ownership and control of the proceeds of specified unlawful activity, in violation of Title 18, 

United States Code, Section I 956(a)(l )(B)(i). 

113. It was a further part and an object of the conspiracy that DO HYEONG KWON, 

the defendant, and others known and unknown, within the United States, knowingly engaged and 

76 



attempted to engage in monetary transactions, as defined in Title 18, United States Code, Section 

l 957(f)(l ), in criminally derived property of a value greater than $10,000 that was derived from 

specified unlawful activity, to wit, KWON and others, lmown and unknown sent wires and 

cryptocmrency transfers worth over $10,000 consisting of proceeds from wire fraud and securities 

fraud, in violation of Title 18, United States Code, Section l 957(a). 

(Title 18, United States Code, Sections 1956(h).) 

FORFEITURE ALLEGATIONS 

114. As a result of committing the offenses alleged in Counts One, Three, Four, Five, 

Seven, and Eight of this Indictment, DO HYEONG KWON, the defendant, shall forfeit to the 

United States, pursuant to Title l 8, United States Code, Section 981(a)(l)(C) and Title 28 United 

States Code, Section 2461 ( c ), any and all property, real and personal, that constitutes or is derived 

from proceeds traceable to the commission of said offenses, including but not limited to a sum of 

money in United States cut1'ency representing the amount of proceeds traceable to the commission 

of said offenses and the following specific property: 

a. The entity Terraform Labs PTE, Ltd.; 

b. Any and all assets, funds, and property of Terraform Labs PTE, Ltd.; 

c. The entity the Luna Foundation Guard Ltd. ; 

d. Any and all assets, funds, and property of the Luna Foundation Guard Ltd. ; 

e. Any and all accounts held in the name of Tenafonn Labs PTE, Ltd. at 

Sygnum Bank AG, including but not limited to accounts with account numbers ending in -3674 

and -1793; 

f. Any and all accounts held in the name of Terraform Labs PTE, Ltd. at 

CIMB Bank, including but not limited to an account with account number ending in - 5203; 

77 



g. Any and all accounts held in the name of Terraform Labs PTE, Ltd. at DBS 

Bank; 

h. Any and all assets, funds, and property held at the cryptocurrency exchange 

KuCoin under user number ending in -5668; 

i. Any and all assets, funds, and property held at the cryptocurrency exchange 

OKX under user number ending in -9526; 

J. Any and all assets, funds, and property held at the cryptocurrency exchange 

Kraken under user number ending in -SCDI; 

k. Any and all assets, funds, and property held at the eryptocw-rency exchange 

Binance under user numbers ending in -1760, -2128, and -9329; and 

l. Cryptocurrency wallets with the following wallet addresses (and all assets, 

funds, and propetty contained within those wallets): 

Address 1: an address ending in -qexu 

Address 2: an address ending in -tv4q 

Address 3: an address ending in -06dz 

A list of this specific property that includes full account and user numbers is attached hereto as 

Attachment 1. 

115. As a result of committing the offense alleged in Count Nine of this Superseding 

Indictment, DO HYEONG KWON, the defendant, shall forfeit to the United States, pursuant to 

Title 18, United States Code, Section 982(a)(l ), any and all prope1ty, real and personal, involved 

in said offense, or any property traceable to such property, including but not limited to a sum of 

money in United States currency representing the amount of property involved in said offense and 

the specific property set forth above in paragraphs l 16(a)-(l). 

78 



116. If any of the above-described forfeitable prope1ty, as a result of any act or omission 

of the defendant: (a) cannot be located upon the exercise of due diligence; (b) has been transfened 

or sold to, or deposited with, a third person; ( c) has been placed beyond the jurisdiction of the 

Court; (d) has been substantially diminished in value; or (e) has been commingled with other 

property which cannot be subdivided without difficulty;. it is the intent of the United States, 

pursuant to Title 21, United States Code, Section 853(p) and Title 28, United States Code, Section 

2461(c), to seek forfeiture of any other property of the defendant up to the value of the above 

forfeitable property. 

(Title 18, United States Code, Section 981; 
Title 18, United States Code, Section 982; 

Title 21, United States Code, Section 853; and 
Title 28, United States Code, Section 2461.) 

79 

DAMIAN WILLIAMS 
United States Attorney

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

UNITED STATES OF AMERICA 

V. 

DO HYEONG KWON, 

Defendant. 

The Grand Jury charges: 

SEALED INDICTMENT 

Sl 23 Cr. 151 (JPC) 

Overview 

1. From at least in or about 2018, up to and including in or about 2022, DO HYEONG 

KWON, the defendant, orchestrated schemes to defraud purchasers of cryptocuITencies created 

and issued by a company that he co-founded called Tenaform Labs PTE, Ltd. ("Terraform"). 

KWON claimed that Ten-aform had used blockchain technology to create a self-contained, 

decentralized financial world with its own money, payment system, stock market, and savings 

bank. KWON presented Terrafonn as having developed functionfog, reliable financial 

technologies on the cutting edge of a movement towards "decentralized finance'' ( or "DeFiu), in 

that Terrafotm's products purportedly operated largely through automated mechanjsms and 

economic incentives, and that Terraform's systems were governed by their users rather than by 

KWON and his associates and subordinates. In fact, KWON's constructed financial world was 

built on lies and manipulative and deceptive techniques used to mislead investors, users, business 

partners, and government regulators regarding Terraform's business. Behind the scenes, core 

Tenaform 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. KWON engaged in 

this deceptive conduct in order to pump up the value of Terraform's cryptocurrencies, which 



KWON and entities he controlled (a) possessed in large amounts and (b) sold to investors in 

exchange for billions of dollars' worth of other assets. 

2. The misrepresentations that DO HYEONG KWON, the defendant, made rn 

furtherance of his schemes to defraud included the following: 

a. The Stablecoin Misrepresentations: KWON lied about the effectiveness 

of the system that lay at the heart of Terraform's c1yptocu11"ency empire, the "Ten·a Protocol," 

which purportedly used a computer algoritlm1 to maintain the value of Terraform's so-called 

"stablecoin" pegged to the U.S. dollar, TerraUSD ("UST"), at a value of $1 for one UST. 

Beginning at least in or about 2020, KWON and his associates advertised the Terra Protocol, 

including the economic incentives it created in the market, as sufficient on its own to maintain 

parity between one UST and one U.S. dollar. In particular, KWON claimed that the Terra Protocol 

on its own had caused the successful restoration ofUST's $1 value after it dropped below 92 cents 

in or about May 2021. That was a lie. In truth, after the Terra Protocol on its own failed to cause 

the restoration of US T's $1 peg in May 2021, KWON reached an agreement with executives at a 

high-frequency h·ading firm (the "Trading Firm") to have the Trading Firm purchase large amounts 

of UST to artificially support US T's $1 peg. UST's $1 peg was restol'ed in May 2021 only after 

the Trading Finn strategically purchased millions of dollars of UST for the purpose of artificially 

propping up the peg. 

b. The LFG Misrepresentations: KWON lied about the governance of the 

Luna Foundation Guard Ltd. (the "LFG"), a purportedly independent body the creation of which 

KWON publicly announced in or about January 2022. KWON claimed that the LFG was managed 

by a governing body that operated independently of Te1rnform and was tasked with deploying 

billions of dollars' worth of financial reserves to defend UST's peg. In truth, KWON 

2 



simultaneously controlled both the LFG and Tenafonn at all relevant times following the creation 

of the LFG; operated the LFG as an arm of Terraform rather than as an independent enthy; 

repeatedly made significant financial decisions for the LFG without the prior approval of its 

governing body; and treated the LFG,s fonds as interchangeable with Terraform's funds when it 

suited KWON's interests, resulting in KWON misappropriating hundreds of millions of dollars in 

assets from the LFG. KWON and others acting at his direction then sought to launder those 

misappropriated funds using a variety of transactions designed to conceal and disguise the nature, 

location, source, ownership and control of the funds . 

c. The Mirror Misrepresentations: KWON lied about the control, operation, 

and extent of user adoption of an investing application on the Tena blockchain called Mirror 

Protocol ("Mirror"), that purportedly allowed for the creation, buying, and selling of synthetic 

versions of stocks listed on United States securities exchanges. KWON claimed that Mirror 

operated in a decentralized manner and that he and Terraform played no role in Mi11'or's 

governance. In truth, KWON and Terraform secretly maintained control over MuTOr, and used 

automated trading bots to manipulate the prices of synthetic assets issued by Mirror. KWON 

funded those manipulative trading bots in part by using a supply of one billion stablecoins that he 

created at the genesis of the Terra blockchain (the "Genesis Stablecoins"). KWON also caused 

Terraform to inflate key user metrics to deceive investors about th.e extent of Minor's adoption 

and decentralization. 

d. The Chai Misrepresentations: KWON falsely claimed that the Terra 

blockchain was being used to process billions of dollars in financial transactions for the Korean 

payment-processing application Chai. KWON pointed to Chai's purported use of the Terra 

blockchain as evidence that Terra had "real world" applications or uses, as distinct from competing 

3 



cryptocurrency platforms. In truth, Chai processed transactions through traditional financial 

processing networks, not the Terra blockchain. To create the illusion that Chai processed 

transactions through the Terra blockchain, KWON and his co-conspirators used an automated 

process that copied transactions onto the Terra blockchain. KWON used the Genesis Stablecoins 

in part to fund these fraudulent eff01is. 

e. The Genesis Coin Misrepresentations: When the Terra blockchain was 

first established in or about 2019, KWON arranged for it to have a preexisting supply of 

approximately one billion Te1Ta stablecoins (the Genesis Stablecoins). KWON provided limited, 

shifting, and knowingly false disclosures to investors about the Genesis Stablecoins. Rather than 

using the Genesis Stablecoins solely for the purposes set forth in his limited and shifting 

disclosw:es to investors, KWON used the Genesis Stablecoins for fraudulent pw:poses, such as 

funding (i) fake Chai blockchain transactions and (ii) trading bots to manipulate the prices of 

synthetic assets issued by Mirror. 

3. Enticed, in part, by the fraudulent claims of DO HYEONG KWON, the defendant, 

both institutional and retail investors flocked to the Terra blockchain, such that, at its peak in the 

spring of 2022, the total market value of all UST and another Terraform cryptocunency, LUNA, 

exceeded $50 billion. Much of this growth followed KWON's brazen deceptions about Ten aform 

and its technology, including effo1ts by KWON and his associates to paper over UST's 

vulnerabilities in May 2021 by secretly manipulating the market for UST. 

4. By May 2022, UST's peg began to break again. By this time, the UST market was 

(a) approximately nine times larger in terms of market capitalization and (b) more than eight times 

larger in terms of daily trading volume relative to one year prior, in May 2021, when the Trading 

Firm was able to assist DO HYEONG KWON, the defendant, in deceptively manipulating UST 

4 



to maintain its $1 value. These significantly changed circumstances led Trading Firm personnel 

in May 2022 to refer to the secret prior peg defense as taking place in "simpler times," and to note 

that "[u]nfortunately it wasn' t so simple this time" compared to when "about $100 M[illion] 

committed was enough to re-peg." While KWON was able to cover up the weaknesses of the 

Ten-a Protocol in May 2021, he was not able to do so in May 2022 when the market had expanded 

substantially. As a result, UST and LUNA crashed, resulting in over $40 billion wotih in investor 

losses. 

5. After the crash of UST and LUNA in May 2022, and the initiation of government 

investigations in multiple jurisdictions into the crash, DO HYEONG KWON, the defendant, 

sought to continue Terraform's business operations and made public misrepresentations about 

being in "full cooperation" with law enforcement inquiries. In truth, KWON fled to foreign 

jurisdictions in which he believed he could purchase political influence and evade legal 

accountability for his fraudulent conduct by using the substantial resources he had obtained 

through fraud. In a recorded conversation with an associate in or about August 2022, KWON 

stated, in substance and in pa1t, that his strategy with law enforcement investigating the crash of 

UST and LUNA was to "tell them to fuck off," and that he had been taking steps to obtain "political 

protection" from multiple countries and was "pretty comfo1table" that he would not be extradited 

to face criminal charges. On or about March 23, 2023, KWON was arrested in Europe for trying 

to use a fraudulent passp01i to travel to a country i11 the Middle East that does not have an 

extradition treaty with the United States. 

Background on Terraform and its Products 

6. Terraform: Terraform was founded by DO HYEONG KWON, the defendant, and 

another individual (the "Co-Founder") in or about 2018, and incorporated under the laws of 

5 



Singapore. Terraform employed personnel around the world, including in the United States. Early 

in its existence, Terraform's operations were closely intertwined with the business that operated 

Chai (which operated through a variety of affiliated entities, such as Chai Pay Holding Company 

Pte. Ltd. and Chai Corporation, together referred to herein as "Chai Co"). Dtuing that early time 

period, Terraform and Chai Co. shared employees and office space. However, KWON and the 

Co-Founder separated the business operations of Terraform and Chai Co. in or about March 2020 

because of regulatory restrictions that applied to Chai Co. due to its status as a licensed electronic 

payments business. Thereafter, KWON became the CEO of Terraform, and the Co-Founder 

became the CEO-of Chai Co. KWON artd the Co-Founder each remained a shareholder of 

Terraform as well as Chai Co., with KWON owning approximately 92% of the equity in 

Tenaform. 

7. The Terra blockcbain: Terraform's business centered on the Terra blockchain. A 

blockchain is a distributed electronic database or ledger that is shared among the nodes of a 

computer network. In theory, the distributed nature of electronic information ensures that accurate 

electronic records can be maintained even if one pa11 of the system fails or if some of the nodes 

become corrupted. Terraform constructed the Terra blockchain using popular and publicly 

available software components and its basic design resembled that of many other blockchains. DO 

HYEONG KWON, the defendant, and other Terraform pers01rnel frequently touted the fact that 

the Terra blockchain and its core products were purportedly decentralized, i.e., that the broader 

community of users of the blockchain and its applications controlled their operation, as opposed 

to KWON and other Terraform personnel maintaining centralized control. 

8. LUNA: Terraform first began promoting the private sale of LUNA in or about 

2018. DO HYEONG KWON, the defendant, along with others, created and promoted LUNA as 

6 



the Tena blockchain's native token that could be used both to earn financia l rewards and to play a 

role in the governance of the system. Specifically, by "staking" LUNA within the Terra 

blockchain, i.e., agreeing to lock up LUNA tokens within the system in a particular manner, 

holders of LUNA received the right to earn fees from transactions on the Tena blockchain and to 

vote on certain decisions affecting the blockchain. An increase in the number of transactions on 

the Terra blockchain would lead to greater rewards for LUNA holders who staked their tokens. 

Tenaform promoted LUNA to investors as providing "equity in Terra's decentralized economy." 

9. Do Kwon: DO HYEONG KWON, the defendant, co-founded Ten·aform in or 

about 2018, and served as its CEO from in or about 2020 through in or about 2023 . KWON 

initially led engineering and research at Terraform, and involved himself in the technical details 

of Terraform's projects. For example, KWON co-authored a white paper concerning the design 

of core aspects of Terraform's technologies and participated in the software development of the 

initial iterations of the Terra blockcbain. KWON also represented Tel1'aform to the public. 

KWON met with investors and potential investors, gave media interviews, and attended 

cryptocurrency industry conferences to promote Tenaform and its products. KWON solicited and 

obtained investments from a number of investment firms in the United States and other locations, 

with the investments primarily consisting of agreements for the purchase or loan of Ten:aform's 

cryptocurrencies such as LUNA. KWON become one of the most prominent business leaders in 

the c1yptocurre11cy industry due to his work at Terraform, which led Forbes Magazine to name 

him to its "30 Under 30" list for Finance & Venture Capital in Asia in 2019. 

10. The Terra Protocol: Tenaforrn distinguished the Terra blockchain from other 

competing blockchains by issuing so-called algorithmic stablecoins pursuant to what it called the 

"Terra Protocol." As described by DO HYEONG KWON, the defendant, and others, these 

7 



stablecoins maintained a steady value even under changing market conditions. This stable value 

was purportedly maintained through an automated algorithmic mechanism in which users could 

exchange a Terra stablecoin on the Ten-a blockchain for a certain amount's worth of LUNA at a 

guaranteed price, and vice versa, regardless of the market price of the stablecoin at the time. Users 

could also exchange one type of Terra stablecoin for another tlu·ough the Tena Protocol. 

Terrafonn referred to this process of on-chain exchange of one Terraform token for another as 

"burning" an old token and "minting" a new token. While many competing stablecoins were 

backed largely or entirely by reserves of fiat currency or other monetary instruments, KWON 

touted the Terra stablecoins as backed principally by the promise that the stablecoin could be 

exchanged for LUNA at a certain price. The blockchain's "smart contracts" supposedly adjusted 

arbitrage incentives relating to the burning and minting process in order to regulate the supply of 

Terra stablecoins and LUNA to maintain a steady value for the stablecoins. 

11. UST: Terraform publicly annow1ced the launch of UST in or about September 

2020. Terraform promotional materials claimed that, tmder the Terra Protocol, one UST could 

always be exchanged for $1 worth of LUNA through the on-chain burning and minting process, 

and $1 worth of LUNA could always be exchanged for one UST. This relationship was supposed 

to maintain a $1 unit value for UST through an algorithmic maintenance of the supply of both 

coins that relied on arbitrage incentives. According to statements made by DO HYEONG KWON, 

the defendant, and others at Te1rnform, if the market price of UST dropped below $1, market 

participants would be incentivized to burn UST to mint $1 worth of LUNA for each burned UST. 

This would reduce the supply of UST, and thus cause its value to return to $1 under the economic 

law of supply and demand. Conversely, if the market price of UST exceeded $1, then market 

participants would be incentivized to bum LUNA to mint UST at a rate of $1 worth of LUNA for 

8 



UST worth more than $1. This would increase the supply of UST, and thus cause its value to 

return to $1 under the economic law of supply and demand. Thus, while LUNA was designed to 

fluctuate in value, UST was supposed to maintain a steady value of $1 tlu-ough the arbitrage 

incentives created by the Terra Protocol. The existence of this mechanism was supposed to assure 

investors that UST's price would remain fixed at approximately $1, and to value UST accordingly. 

12. Terraform's "DeFi" Applications and Entities: Over time, Te1rnform and its 

affiliated entities developed and laW1ched various purportedly decentralized finance applications 

and entities designed to increase the number of users and transactions on the Terra blockchain, 

including the following: 

a. Chai: Chai was a Korean payment platform that purportedly began using the Terra 

blockchain to process financial transactions in or about June 2019, creating both (i) a real-world 

application for the Terra blockchain; and (ii) a means of generating substantial fees for LUNA 

holders. 

b. Mirror Protocol: Mirror, a platform launched in or about December 2020 that 

allowed for the creation, buying, and selling of synthetic versions of financial assets, such as stocks 

listed on United States securities exchanges, using the TetTa blockchain. These synthetic financial 

assets were called "mAssets." 

c. Anchor Protocol: Anchor, a platform launched in or about March 2021 that 

allowed for the borrowing and lending of UST, and that offered an approximately 20% annual 

retum for UST deposited in Anchor. 

d. The Luna Foundation Guard: The LFG, an entity incorporated in Singapore in 

or about December 2021 and publicly launched in or about January 2022, eventually maintained 

billions of dollars' worth of financial reserves in the form of other cryptocurrencies such as bitcoin 

9 ... 



(the "LFG Reserve") purportedly to support UST's peg to the dollar. The LFG was promoted as 

being governed by an independent body of industry experts (the "LFG Governing Council"). 

The Stab)ecoin Misrepresentations 

Kwon Sees Opportunity in Cryptocurrency Depelldi11g on Olle's "Moral Constitution" 

13. DO HYEONG KWON, and the Co-Founder first began discussing the creation of 

a stablecoin in or about early January 2018. In an email exchange that month, the Co-Founder 

asked KWON's view on the many cryptocurrencies being launched around that time, observing 

that it "[a]lmost seems like a huge ginonnous bubble that we should somehow partake in before it 

crashes?" KWON responded that there were " [g]ood returns to be had'' on different kinds of 

cryptocurrency projects "depending on your risk appetite / moral constitution;)." The Co-Founder 

observed to KWON that there were "frothy market conditions" in the cryptocunency industry in 

which it "almost feels stupid not to take part," and that the requirements for a successful 

cryptocurrency launch had "nothing to do with the fundamentals of the business," but rather 

depended on a "convincing and lofty white paper" and a "deep network of big name partners," 

an1ong other assets. Later in that email exchange, KWON offered his thoughts on the design of a 

potential algorithmic stablecoin, advocating for developing a stablecoin that used a "clever 

algorithm" and "curation" by a centralized foundation as a "[w]inning strategy." KWON also 

observed that for algorithmic stablecoins, "[s]tabiUty has not been proven" and that a "catastrophic 

event (market-wide crash) could de-peg the coin." 

Kwon Promotes the Terra Protocol 

14. DO HYEONG KWON, the defendant, began promoting Terra.form's 

cryptocurrencies to potential investors in or about 2018, and came to serve as the principal public 

face of Terraform through the crash of UST and LUNA in May 2022. 



15. In public presentations and conversations with potential investors and others, DO 

HYEONG KWON, the defendant, and others acting at his direction, promoted the Terra 

blockchain by emphasizing tlie design of its stablecoins, including UST, that operated through the 

purportedly automated and decentralized Terra Protocol. For example, in a videorecorded 

interview that was published on a fmancial news website on or about October 25, 2021, KWON 

promoted the purportedly decentralized nature of Terraform's c1yptocw-rencies, including in the 

following statement: 

It is cmcial that a decentralized economy and these decentralized 
apps depend on decentralized money. And that is essentially sort of 
the core thesis behind what Terra is working on in the sense that we 
have these stablecoins that are pegged to various different fiat 
currencies such as the U.S. dollar, the Korean won, the SGD 
[Singapore dollar] and so on and so forth that are entirely 
decentralized and cannot be censored. 

An image from that interview is reproduced below, including a graphic showing the significant 

increase in the value of LUNA: 

TERRA USD (lUNAI USD) 
42.76 
+1.84 (•4 .49%) 

GO 

)0 

-0 ore ,~.. ,r, 1,1,.A APk 1,1,.y ,UN M AUG ,., OCT 

As another example, in an interview on the cryptocurrency news program "Unconfirmed" that was 

distributed via YouTube and podcast on or about October 29, 2021 (the "October 2021 

11 



Unconfirmed Podcast"), KWON made the following statement: 

So the differentiator of TerraUSD versus some of the better known 
stablecoins in the industry such as Tether and USDC is that it's 
decentralized and algorithmic. Right? So while uh for something 
like Tether there is a dollar in bank deposits uh, supposedly, for 
every un.it of stablecoin that's issued, Terra uses a set of on-chain 
incentives to make sure that the coin can maintain pr.ice parity with 
the dollar. 

As discussed in greater detail below, KWON's representations to investors about how Terraform's 

stablecoins would maintain their stability shifted over time as KWON increasingly sought to 

portray the Terra block.chain and its products as decentralized and automated. 

Kwon 's Early Statements About the Need for a Reserve to Support tlte Terra Protocol 

16. In or about the first year of Terraform's existence, DO HYEONG KWON, the 

defendant, made less ambitious statements about the strength of the Terra Protocol compared to 

the claims he would make later on. This early messaging coincided with Terraform's first two 

rounds of fundrais.ing from investors, including a first seed round approximately between April 

and May 2018, and a second seed round approximately between August and October 2018. In that 

earlier time period, KWON represented to investors in promotional materials that his stablecoins 

would not rely solely on the Terra Protocol to maintain their consistent value, but also on 

substantial reserves of both fiat cunency and LUNA to ensure the stability of Terraform's 

stablecoins. For example, in 2018, KWON distributed a document promoting the private sale of 

LUNA (the "2018 Private Offering Document") that made the fo llowing representations: 

a. Terraform would initially devote 80% of its funds to a centralized 

"temporary fiat reserve" and then "gradually transition from leaning on the fiat reserve to 

fimctioning as a fully decentralized system." The contemplated centralized reserve of fiat currency 

was to "act as a guarantor of last resort, ensuring the ability to buy up Terra during extreme market 

12 



downturns" and provide "an additional layer of safety to the Protocol" that "need[ed] to be put in 

place in the early days after network launch, when the ecosystem is most vulnerable." 

b. Terraform would also establish a longer term, decentralized "Stability 

Reserve" of LUNA, consisting of 20% of the total supply of LUNA (i.e. , 200 million out of the 

one billion total LUNA tokens) "to protect the stability of the system" and supplement the Terra 

Protocol, with the balance of the total supply of LUNA allocated to Terraform employees (200 

million LUNA) and investors and business partners (600 million LUNA). In the longer term, 

according to the 20 18 Private Offering Document, Tenafonn would rely on both the Terra Protocol 

and the Stability Reserve of LUNA to maintain the stability of the company's stablecoins, and 

Terraform was "confident that the decentralized Stability Reserve and the Terra Protocol [would] 

be effective in guaranteeing solvency in the long run." 

Kwon Begins Claiming that the Terra Pl'otocol Alone Will Maintain the Peg 

17. Leading up to UST's launch in or about 2020, DO HYEONG KWON, the 

defendant, began making substantially different representations to many investors about how 

Terraform's stablecoins would maintain their stability. Specifically, KWON began promoting the 

Terra Protocol to investors as sufficient on its own to maintain the fixed value of UST, without the 

support of any sort of financial reserve. This shift in messaging coincided with Terraform seeking 

a new "growth" round of funding from investors beginning in or about the middle of 2019. 

18. This shift was reflected in revisions to an investor presentation document 

distributed by DO HYEONG KWON, the defendant, and others at Terrafom1. An early version 

of that document, distributed in or about July 2018, included a slide referencing the establishment 

of a "stability reserve" (depicted below on the left, with relevant text highlighted); however, a 

13 



version of that document distributed approximately one year later, in or about July 2019, removed 

the reference to a "stability reserve" from a substantially similar slide ( depicted below on the right). 

And guorantees solvency 
through a decentralized stablllly reserve 

~ 
... ... _ , .... ,. .............. , .. . , ................ ,. ~ ..... 

Cua,11ntt1d Otc tntraflud 8olv,ncy 

,., ... ,_,,,_ .. , .. 
1U•--· _.._ONO ... -.. --··-··-­lo#N- •••• 

) 

The relationship 
btlw.tn TtITT ancs Lun,i 

) 

The revised July 2019 version of the slide deck also portrayed the Terra Protocol as the exclusive 

mechanism through which Terraform's stablecoins would maintain their pegs, asserting that "[t]he 

system maintains Terra's price peg by standing ready to swap Terra and Luna at the peg," as 

reflected in the excerpt below. 

HOW LUNA IS USED 

TO STABILISE 

THE PRICE OF TERRA 

Thr. system ma1nta111~ Terr,1 price rrng ny 
stand111g n•acJy to swc1p Terril ancl Lunn at !he peq 

lllustr11t1vn exrnnplC? of !>t:1b11ls;-it1on 111echon1 .in 1n 

L;Ortll .tCt ionary q•df' 

Al UI "''"' tr• (ltt) fl lQt o:,noit J'l It '"' c11c,.,111·1ri1J lV(l,l'I', (If 11 •,1'.J .. u Jt(rl'I~ 

Dllr'IClr'-',j tnt '" (f I HJ .. to t-ttl 

The protocol ,lCljUSlS It ans;i, t1011 li!tlS and 
atlo1'flti(lll f)f new 111011cy (~e1g11lt)I riye) lll lllOlflldUl 

tal>le <Jernand ror Lww 111 all r conornlc: 1 onclil1ons 

Thus, by the time UST was launched in or about 2020, KWON represented to investors that the 

Terra Protocol, including the the economic incentives it created, was the sole mechanism that 

would be used to maintain the pegs of Terraform's c1yptocurrencies. 

14 



19. DO HYEONG KWON, the defendant, caused Tenaform to repeatedly represent to 

investors between in or about 2019 and in or about 2021 that the Terra Protocol, including the 

economic incentives it created in the market, was sufficient on its own to maintain the fixed value 

of UST. Indeed, Terraform's promotional materials began to advertise the Terra Protocol as the 

exclusive mechanism through which Tenafom1's stablecoins would maintain their pegs. KWON 

and others at Tenafo1m touted this as proof of the decentralized nature of the Terra blockchain 

and its core products. For exan1ple: 

a. On or about February 22, 2019, Terrafonn's head ofresearch published an 

article titled "Introducing the New Te1rn Protocol" explaining how the Terra Protocol maintained 

the price pegs of Terraform 's stablecoins. Later, on or about September 16, 2020, KWON sent a 

link to that a11icle to a business partner and explained, "We have an algorithmic stability model 

where the protocol 'makes the price' of the stablecoins by allowing tokens to be swapped at par 

with luna." The business partner asked in response, "so there is no reserve right?" KWON replied, 

"no reserve.'' 

b. On or about October 21, 2020, KWON caused Terraform to publish a video 

on its YouTube channel titled "How Does Terra Work?" The video explained, in substance and 

in pru1, that Terraform had "designed a machine that swaps one dolJar worth of LUNA to one 

UST" (i.e. , the Terra Protocol algorithm) and this mechanism, combined with market incentives, 

would respond to any variation in UST's price by "bringing its price back to the $1 peg." A portion 

15 



of that video with an animated depiction of Terraform's Terra Protocol "machine" is depicted 

below: 

C 0 i youtube.com/watch?v=KqpGMoYZMhY&t=17s 

- D YouTube 

How Does Terra Work? 

••• A) Shoie 

284,509 ,iew, O<tZl, 2020 
How dMS Tt nH '11bJlltyrnte..Pllnl'"1 v.otk? i.·,, t JCpi.1n hOWTttrl lfflUlll"i! 111b!t Utbino lll"il •a co-l1tt r11, l ht foundrtlon thi1 tnal:IIH \ht Klllb•litY ftQUltt<S ro, fflUI l dOP,IOf\. 

The video also stated that "much like the moon which stabilizes the earth's .rotation, LUNA and 

its stakers are essential to Terra's stability. Join us on our mission to create a truly open and 

transparent monetary platform that no one controls, setting money free for billions worldwide." 

c. In or about 2021, KWON and other Terraform employees distributed a 

fundraising document to multiple investors asserting that the Terra Protocol "keeps UST on peg." 

16 



20. DO HYEONG KWON, the defendant, gave numerous interviews in which he 

promoted the Terra Protocol, including the economic incentives it created, as the sole mechanism 

that maintained UST's peg. For example: 

a. In an interview on a podcast called "The MikoBits Show" that was 

distributed on or about January 28, 2021, KWON stated, "So Terra is different in the sense that 

it's an algorithmic stablecoin, so, which means there are no reserves that are backing the 

stablecoin." An image from a video version of that interview posted to YouTube is reproduced 

below: 

C, In) !; youtubt.com/vlalCl1lv•~Ps_W0b89M&t •1531s 

- D VouTube 

MlkoBlll Blockchaln, NFT anG DtFI Show 

S,188ritw1 Jan.20, 202.1 

b. In an interview on a podcast called Modern Finance that was distributed on 

or about June 22, 2021, KWON was asked by the host, "how do you maintain the peg?" KWON 

responded, in substance and in part, "at any given time the protocol it basically acts as the price 

17 



maker for Tena, regardless of what its secondary market prices might be." KWON claimed that 

this was possible because there were "tons of different traders" who used automated trading "bots" 

to take advantage of the arbitrage opportunities provided by the Terra Protocol. 

c. In an interview on a podcast called "This Week in Startups" that was 

distributed on or about July 22, 2021, KWON stated "so Terra USD is in sort of a burgeoning class 

of stablecoins called algorithmic stablecoins and the idea is there that while the cwTency remains 

itself pegged to a fiat currency like the dollar it's not backed explicitly by a dollar in the bank 

account instead it uses a set of game theoretic incentives that live on a blockchain uh to make sure 

that the currency retains its value against the dollar .. .. " 

21. With respect to Tenaform's early investors who had once been told by DO 

HYEONG KWON, the defendant, that the Terra Protocol needed a stability reserve as a backstop, 

KWON claimed that such a support system was no longer necessary . On or about January 6, 2021, 

KWON sent messages to multiple early LUNA investors asserting that " [m]any of the use cases 

for tokens that we had designed when we first launched the network don't make sense anymore" 

such as "a stability reserve." 

22. As DO HYEONG KWON, the defendant, promoted UST and the strength of the 

Terra Protocol, the market capitalization of Terraform's cryptocurrencies increased dramatically, 

18 



from under $200 million in or about the end of 2019 to over $40 billion by the end of 2021 , as 

depicted in the chart below: 

50 

10 

Terra Asset Market Caps 

Terra (LUNA) Markel Cop 

- TcrraUSD (UST) Mnrkct·Cap 
- TcrraKRW (KRT) Morkcl Cap 
- Total 

d>-~0"49'l.,\r;::,,"\,~~~ ~~ "t-~,.,~~'\ ... ❖<;- -.....s "(-❖"-oc,'l.J~ 0~ ~04911," "\,~'V'~~ ~~ "(-~~fb,'\,....❖<:- \~ "(-❖6cc,c,~ &'..:;.,04,l 

Dale 

The Trading Firm's Agreements With Terra.form 

23. In or about November 2019, Terrafom1 entered into a formal written investment 

agreement with the Trading Finn. Under that agreement, and an amendment to the agreement 

signed in September 2020, the Trading Firm had the right to obtain up to 65 million LUNA at 

specified prices under $1. However, the agreement contained certain restrictions on the Trading 

Firm's rights to obtain the LUNA. Specifically, the agreement divided the 65 million LUNA into 

different tranches, with each tranche including separate tlu-eshold requirements for the Trading 

Firm to receive a certain amount of LUNA. The tlu-eshold requirements consisted of the Trading 

Firm minting a certain number of UST, and cryptocunency exchanges experiencing certain 

volumes of UST trading. 

24. Separate from those formal agreements, in or about August 2020, the Trading Finn 

and Terraform entered into a "gentleman's agreement" for the Trading Firm to help maintain 

UST's $1 peg. That agreement was reflected in an August 25, 2020 email between an executive 

19 



at the Trading Firm ("Trading Firm Executive-1 ") and DO HYEONG KWON, the defendant, and 

was not publicly disclosed. In the email, Trading Fi1·m Executive-I proposed financial incentives 

"that align us in the most direct fashion," and referenced the "gentleman's agreement" that, among 

other things, the Trading Firm would "supp011 trading on terra stable coin pairs on all exchanges 

we're connected to and help maintain the peg." In a subsequent internal email, Trading Fi1m 

Executive-I sent an email stating that he viewed the Trading Firm's investment with Terraform as 

potentially resulting in a "multi-billion dollar enterprise" and "a pile of profits and money printing 

maclune that spits out a continuous strean1 of widely adopted stablecoins." 

Tlie May 2021 Depegging of UST 

25. In or about May 2021, approximately one year before the crash of UST and LUNA, 

UST's $1 peg began to break and UST traded substantially below $1 on cryptocurrency exchanges. 

By on or about May 23, 2021, the market price for both UST and LUNA had fallen significantly, 

with UST dropping below 92 cents and LUNA losing approximately 75% of its peak value over a 

period of days, as depicted in the chart below. 

1.00 ~ - ~ -

0.99 

0.98 

0 2, 0.97 
II) 

-~ 0.96 
~ 
f-, 
~ 0.95 

0.94 

0.93 

0.92 

UST 
LUNA 

01 03 OS 07 

Price of UST and LUNA in May 2021 

r 
09 II 13 15 17 19 21 23 

Date 

20 

25 27 29 31 

6 

4As UST's market price remained below $1, the market price of LUNA declined to the point that 

the total market capitalization of LUNA (which purpo1tedly supported the value of UST th.rough 

the Terra Protocol) fell below the total market capitalization of UST, as depicted in the chart below. 

May 2021 Daily Markel Caps 

- UST 
LUNA 

---~··· ~ . 

01 03 05 07 09 II 

I I . . 
• • ..... 

13 15 17 J 9 21 23 25 27 29 31 
Date 

Under those circumstances, the Terra Protocol could not even in theory have operated as promised 

and provide UST holders with $1 worth of LUNA for eve1y UST token because the aggregate 

amount of LUNA in existence did not have sufficient value to be redeemed for the aggregate face 

value of all UST in existence, i.e., the market cap of UST exceeded the market cap of LUNA. As 

a result, the decline in the prices of both UST and LUNA in May 2021 posed systemic risks to the 

viability of UST. 

26. The substantial drop in the price of UST in or about May 2021 resulted in the 

"burning" of large amounts of UST in order to "mint" LUNA, a dynamic that DO HYEONG 

KWON, the defendant, had advertised as the means by which the Terra Protocol would restore 

UST's $1 peg. However, one aspect of the Terra Protocol design significantly limited its 

effectiveness when the protocol experienced a high volume of "burn" requests going in only one 

21 



direction: KWON designed the Tena Protocol to impose increasingly large transaction fees under 

those circumstances. Thus, when the Terra Protocol experienced many more requests to burn UST 

than to burn LUNA, burning UST resulted in receiving less than $1 worth of LUNA due to the 

higher transaction fees, reducing the incentive to actually use the Terra Protocol. In May 2021, 

the Terra Protocol was configured to effectively handle only approximately $20 million in 

redemptions of UST for LUNA before fees grew to a level that it became unprofitable to use the 

Terra Protocol as an arbitrage mechanism. This fee structure acted as a tlll'ottle on the Terra 

Protocol's effectiveness in the face of significant selling or buying pressure for UST, and was not 

disclosed in many of Ten a.form's promotional materials. 

The Trading Firm's Secret Role in Restoring the UST Peg in May 2021 

27. After UST began to lose its $1 peg in May 2021, DO HYEONG KWON, the 

defendant, negotiated a secret oral agreement with the Trading Firm pursuant to which the Trading 

Firm agreed to purchase tens of millions of dollars of UST and LUNA for the purpose of artificially 

propping up UST's $1 peg. In exchange, KWON agreed to accelerate the delivery of LUNA to 

the Trading Finn under the patties' investment agreements. This quid pro quo agreement between 

Terra.form and the Trading Fim1 was never memorialized in writ ing, and the accelerated LUNA 

delivery schedule was not included in a written contract between the patties until in or about July 

2021. 

28. As a result of the May 2021 secret agreement between DO HYEONG KWON, the 

defendant, and the Trading Finn, the Trading Firm authodzed its traders to spend tens of millions 

of dollars to artificially prop up UST. The Trading Firm suspended ce1tain automated trading 

strategies relating to UST and LUNA that had long been in place, and began placing manual trades 

to support UST's peg. An internal Trading Firm document noted that as of May 23, 2021, "LUNA 

22 



[was] down 40%" and this gave rise to a "fear of a run on the bank given that UST is 'backed' by 

LUNA and LUNA market cap dipped below UST market cap .... " The document noted that 

under these circumstances, the Trading Firm "[n]eeded to support UST directly" on a particular 

cryptocurrency exchange (rather than using the "on chain" Terra Protocol), and that the Trading 

Firm had put in place a trading strategy to selJ up to $50 million worth of another cryptocunency 

(Tether) for UST. Ultimately, the Trading Firm authorized its traders to spend up to $100 million 

worth of assets to defend UST' s $1 peg should it prove necessary. 

29. The Trading Finn's purchases of UST after the coin lost its $1 peg in May 2021 

made up a substantial portion of purchases in a key market for UST at critical times. For example, 

during an approximately thirty-minute period on May 23, 2021, the Trading Firm made over 90 

percent of the UST purchases in one major UST trading marketplace. Specifically, on the morning 

of May 23, 2021, the Trading Firm manually purchased millions of dollars ' worth of UST using 

the stablecoin Tether on the cryptocurrency exchange KuCoin, contributing to an increase in the 

market price of UST, as depicted in the chart below. 

Trading Firm's Proportion of UST Purchases in the KuCoin USDTUST Trading Pair 

10:30 10:35 10:40 10:45 10:50 10:55 11 :00 
Time (EDT - May 23, 2021) 

Trading Fimi's mnnual buy volu,uc ns pcrcc1H3gc of h>lnl m11rkct - Mnrkcl trodc price 

0.98 C: 
~ 

0.97 :?. 
@ 

o.96 c 
(I) 

0 .95 8 

30. The Trading Firm's purchases of UST on May 23, 2021 and May 24, 2021 were 

principally aimed at artificially propping up the market price of UST, as opposed to obtaining UST 

at the best available price in the market. For example, the Trading Firm placed orders on a 

cryptocurrency exchange to purchase UST at prices that were higher than the prevailing market 

23 



price on that exchange. In other words, the Trading Firm agreed to pay more than market price 

for UST as part of an effort to artificially inflate the value of UST towards its advertised $1 price. 

31. Following the Trading Firm's purchases of substantial amounts of UST and LUNA 

in May 2021, UST returned to an approximate market price of $1 . 

32. DO HYEONG KWON, the defendant, and others within Terrafonn believed that 

but for the Trading Firm's rutificial support for UST's $1 peg in May 2021, the token would have 

collapsed at that time, and expressed that view to other Terraforrn personnel. For example, KWON 

stated to a Terraform employee that if the Trading Firm had not propped up UST, Terraform might 

have been "fucked." Also, an internal Terraform employee resource manual from 2021 explained 

that the Trading Firm was "quietly one of the biggest players in crypto" and "the biggest on-chain 

market maker of UST and saved our ass in May this year." 

33. The Trading Firm earned substantial profits as a result of the restoration of UST's 

$1 market price in May 2021. In total, the Trading Firm made over $1 billion in profits from its 

investment in Terraform's cryptocunencies, principally by exercising its options to purchase 

LUNA at or around 40 cents per token under its agreements with Terraform, and selJing significant 

quantities of that LUNA prior to the May 2022 crash, when LUNA's market price peaked at over 

$1 15 per token. Over 90% of the Trading Firm's profits on LUNA were made between May 2021 

and May 2022, and thus would not have been obtained had LUNA and UST crashed in May 2021 

rather than May 2022. 

Misrepresentations About the Means Used to Restol'e UST's Peg ill May 2021 

34. After the May 2021 temporary depegging event, DO HYEONG KWON, the 

defendant, and others acting at his direction, misrepresented the means that had been used to 

restore UST's $1 peg, concealing that KWON bad reached a secret agreement for the Trading Firm 

24 



to deploy its funds for the purpose of artificially restoring UST's peg. KWON, and others acting 

at his direction, falsely claimed that Terra Protocol's algorithmic mechanism by itselfrestored the 

peg without financial support. For example: 

a. On or about May 24, 2021, KWON caused Terraform to state the following on 

Twitter: "The peg is gradually normalizing again and will continue to do so as volatility subsidies. 

Remember, volatility at this scale is ephemeral, not permanent. On-chain swap spreads are 

healing .... The drawdown in the price of LUNA, UST peg deviation, and collateral effects across 

the ecosystem in such extreme market volatility is about as intense of a stress test in live conditions 

as can ever be expected. We just experienced a black swan. Despite sharp dislocations the on­

chain swap spread is mending. UST peg is normalizing, and UST's role as a centerpiece of demand 

for the Tena ecosystem has not changed - buttressing the growth of the Terra economy as the 

system bounces back from distress." 

b. In a podcast called Terra Bites that was distributed on or about May 29, 2021, an 

interviewer asked KWON about the success of the Terra Protocol during the temporary depegging 

of UST earlier that month, stating "there was no particular special action taken that I'm aware of 

by the Terra team, or even the community, in order to bring things back in line and it just took a 

while for UST to re~over its peg. Do you think that's accurate? How, I mean I think it did pretty 

well. I mean it didn't come collapsing." KWON responded as follows, in substance and in part: 

Yeah . . . So, I think one of the good things about this is that, you 
know, even though we've studied and been working on the Terra 
protocol for a really long time now, we've never had a stress test of 
this magnitude. And I think what we've proved is that the Terra 
Protocol indeed does need a lot of, what has been up to now, purely 
theoretical assumptions. And that it can survive black swan events, 
and then sort of, sort of, you know, total death spiral of all of these 
different assets and economies all at once. So I think that that's been 
good .... 

25 



c. On or about June 9, 2021, Terraform's head of communications (the "Terra PR 

Executive") published an article titled "Stablecoins - Defining the Terra Algorithmic Design," 

that discussed the May 2021 temporary depeg of UST. In the article, the Terra PR Executive 

described the Terra Protocol as the exclusive mechanism for maintaining the pegs of Te1Taform's 

stablecoins, stating that Terraform defended those pegs ''indirectly via arbitrage incentives," and 

that the Terra Protocol "valiantly" bandied market volatility in May 202 J. The following year, on 

or about April 18, 2022, the Terra PR Executive directed a reporter for a national newspaper to 

that atiicle, and stated about the May 2021 depegging event: "Tena absorbed what many critics 

call a 'Death Spiral' or 'Black Swan' in a 75% drawdown in the LUNA price, with the UST peg 

recovering naturally via the protocol's mechanics and free market dynamics. . . . It 's hard to 

imagine a more significant volatility event than what occtUTed during that period in such a young 

stage of the Te1rn protocol, and Terra passed the test." 

d. In an October 4, 2021 videorecorded interview of KWON broadcast on the 

YouTube channel of a cryptocurrency entrepreneur, the interviewer stated that with respect to the 

May 2021 depegging of UST that they were "actually was quite impressed with UST dropping I 

thtnk only 10 cents or so, which was interesting to see and I think built confidence in the project," 

and asked whether "Tenaform Labs participates at all in mru·ket making to keep UST at peg?" 

KWON responded that "we don't really do much of that anymore," and stated that "there' s like a 

number of large market makers that participate in stabilizing the peg of UST. Most of them- I 

don' t think any of them have a contractual relationship with us. It's just something that they do 

because they feel like they can make money out of it .... " KWON's statement was lmowingly 

false at1d misleading. As KWON well knew, the Trading Firm had a "gentleman's agreement" 

with Terraform to support UST's $ l peg, and the Trading Film purchased large amounts of UST 

26 
.... 



in May 2021 in exchange for an oral promise by KWON to accelerate the delivery of LUNA to 

the Trading Fi.rm under the parties' investment agreements. 

e. In another interview with the cryptocurrency research and investment firm Delphi 

Digital, specifically a podcast distributed on about October 5, 2021, KWON remarked about the 

May 2021 depegging of UST, in part, "We handled our prices pretty well. So as swaps were 

happening we saw the price peg of Terra USD slip 6 and 7 percent for a period of few days, but 

then it recovered as redemptions started to sort of smooth out in the open market. I think the reason 

that I would have to give as to why Tena is more resilient than other types of algorithmic 

stablecoins is because there's a vibrant economy that is built, that is being built, on the Terra 

blockchain." 

f. Dw·ing a March 1, 2022 episode of an audio talk show called the Ship Show that 

was publicly distributed on Twitter, and that was hosted by personnel from the Trading Firm, 

KWON spoke about the May 2021 depegging event, stating, in part, "it took a few days for the 

slippage cost to naturally heal back to spot ... the protocol automatically self-heals the exchange 

rate back to whatever the spot price is being quoted by the oracle. So that' s why it took several 

days for the peg to recover." 

35. After UST's $1 peg was restored in May 2021, investors continued to purchase 

UST and LUNA, including based on false representations by DO HYEONG KWON, the 

defendant, and others that the Terra Protocol was the sole mechanism that KWON and Terraform 

had deployed to restore UST's $1 peg in May 2021. 

Tlte Establishment of the LFG Following UST's Undisclosed Vulnerability 

36. DO HYEONG KWON, the defendant, subsequently worked to create a new 

financial reserve-the LFG Reserve- to defend UST's $1 peg, without disclosing the Trading 

27 



Firm's secret deployment of its own funds in May 2021 to a1tificially prop up UST's $1 peg. The 

LFG Reserve eventually held almost $3 billion worth of bitcoin, among other cryptocurrency 

assets. Rather than being promoted as a critical attempted fix for a demonstrated vulnerability in 

the stablecoin mechanism, the LFG Reserve was touted in a February 22, 2022 LFG press release 

as merely providing "a fmther layer of support." Trading Firm Executive-I, who was a member 

of the LFG Governing Council, provided the following statement for that press release: "[The LFG 

Reserve] further strengthens confidence in the peg of the market's leading decentraUzed stablecoin 

UST .... It can be used to help protect the peg of the UST stablecoin in stressful conditions. This 

is similar to how many central banks hold reserves of foreign currencies to back monetary 

liabilities and protect against dynamic market conditions." The press release omitted any reference 

to the depegging of UST in May 2021, and the fact that KWON negotiated an agreement for the 

Trading Firm to deploy its funds for the purpose of artificially restoring UST's peg at that time. 

The Explosive Growth of UST and LUNA After May 2021 

37. By in or about May 2022, one year after the May 2021 temporary depegging of 

UST, the total market value and trading volume for UST and LUNA had increased substantially. 

UST's total market value increased from approximately $2 billion to approximately $18 billion, 

and LUNA's total market value increased from approximately $5 billion to approximately $29 

billion. The average daily trading volume of both coins also increased significantly over that one­

year time period: UST's average daily trading volume increased from under $100 mil.lion to over 

$800 million, and LUNA's average daily trading volume increased from approximately $500 

million to approximately $2.5 billion. Thus, when UST's peg began to break again in May 2022, 

DO HYEONG KWON, the defendant, was confronted with a UST market that was (a) 

approximately rune times larger in terms of market capitalization and (b) more than eight times 

28 



larger in terms of daily trading volume relative to May 2021. 

38. A significant amount of this growth was diiven by the approximately 20% interest 

rate offered on UST deposits by Anchor. Sho1tly before the crash of UST and LUNA in early May 

2022, approximately 70% of all UST was deposited in Anchor (approximately $12.9 billion out of 

a total circulating supply of approximately $18.5 billion). Anchor paid out far more in interest to 

its depositors than it earned from its bonowers, and Anchor was able to pay its approximately 20% 

interest rate only because DO HYEONG KWON, the defendant, caused the diversion of funds 

from the LFG Reserve and Terrafonn to Anchor. For example, in or about February 2022, KWON 

caused the LFG to divert approximately $450 million from the LFG Reserve to Anchor. KWON 

himself deposited funds in Anchor, and personally benefitted from these subsidies in light of his 

status as an Anchor depositor. 

39. DO HYEONG KWON, the defendant, was repeatedly warned that the 

approximately 20% Anchor interest rate enabled by substantial subsidies was unsustainable, and 

would contribute to destabilizing the entire Terra blockchain system by artificially inflat ing 

demand for UST. KWON nonetheless maintained the approximately 20% Anchor interest rate. 

Tlte May 2022 Crash of UST and LUNA 

40. In or about May 2022, approximately one year after the temporary depegging of 

UST in May 2021, the market price of UST dropped below $1 and failed to recover despite the 

deployment of large amounts of capital from Terraform and the LFG to support UST's $1 peg. As 

a result, the value of UST and LUNA crashed. While DO HYEONG KWON, the defendant, was 

able to cover up the weaknesses of the Terra Protocol in May 2021, he was not able to do so in 

May 2022 when the market had expanded substantially. In the midst of the May 2022 crash, one 

Trading Firm trader remarked to his colleagues that the Trading Finn' s defense of UST's peg in 

29 



May 2021 took place in "simpler times/' and noted that "[u]nfortunately it wasn't so simple this 

time" compared to when "about $100 M[illion] committed was enough to re-peg." The May 2022 

crash of UST and LUNA resulted in over $40 billion in investor losses. 

The Luna Foundation Guard Misrepresentations 

False Statements About the LFG's Independence and Governing Council 

41. DO HYEONG KWON, the defendant, issued, and caused others to issue, public 

statements asserting that the LFG operated as an independent entity governed by the LFG 

Governing Council. For example: 

a. KWON caused Terraform to issue a tweet on or about January 19, 2022 

asserting that "[t]he LFG is governed independently by an international Council of industry leaders 

and experts .... " 

b. Also on or about January 19, 2022, KWON tweeted that the "LPG is 

governed by top builders in the @terra_money ecosystem," that the LFG Governing Council 

would serve as "a counterweight to TFL [Terraform] in the @terra_money ecosystem," and that 

"[d]ecentralization wins." 

c. On February 8, 2022, KWON stated in a public forum on the internet that 

"[t]he reason we've set up LFG is to decenh·alize decision making processes in the Terra 

ecosystem, and having multiple directors (all building on the Terra ecosystem) make the decision 

instead of one person is an important step in that direction." 

d. Several months later, in a podcast titled "Unchained" that was distributed 

on or about March 29, 2022, KWON stated that the approximately $3 billion wo1th of bitcoin held 

in the LFG Reserve at the time was held by the LFG Governing Council in secure "multisig" (short 

for "multi-signature") wallets, i.e., cryptocwTency wallets that require multiple private keys to 

30 



approve a transaction. Specifically, KWON stated about the LFG Reserve, "so the Luna 

Foundation Guard has a, you know, has a council of about seven people, so its secured in a multisig 

held by the council members." 

e. KWON asserted, and caused others to assert, that the LFG spent 

approximately $2.8 billion wo1th of its own funds in the form of the LFG Reserve (largely 

consisting of approximately 80,000 bitcoin) in a failed effort to defend UST's peg in May 2022, 

and that the LFG used two other purportedly independent pa1ties to make those trades, specifically 

the Trading Firm and Terrafonn. 

f. KWON po1trayed the LFG Governing Council as an independent 

gatekeeper for the use of funds in the LFG Reserve, including dw-ing the time period when UST 

and LUNA crashed in May 2022. For example, on or about May 9, 2022, KWON tweeted, "The 

LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market 

concerns around UST," and that "we made this decision via an unanimous vote of the council." 

Funt/raising for the LFG Reserve 

42. DO HYEONG KWON, the defendant, raised billions of dollars' worth of assets 

from investors to fund the LFG Reserve. In the course of soliciting those funds, KWON repeatedly 

represented to investors that the LFG Reserve would be used to defend UST's peg, and that neither 

the LFG nor Terraform stood to profit from the LFG Reserve. For example, on or about November 

16, 2021, KWON emailed an investor that Ten:aform was looking to raise $1 billion worth of 

bitcoin assets " to put into a decentralized reserve smart contract to buttress UST's stability 

mechanism (users can redeem UST against Bitcoin)," and that "[w]e believe this will assuage 

lingering worries about the stability of UST's core stability mechanism .... " KWON' s email 

attached an investor pitch deck asserting that the fundraising for the LFG Reserve "will be a novel 

31 



philanthropic raise where the funds added are controlled by the community, transparent on-chain." 

Approximately two months later, on or about January 24, 2022, that investor entered into an 

agreement with the LFG to provide approximately $50 million worth of assets for the LFG Reserve 

in exchange for LUNA tokens, with the agreement stating that it was made "in furtherance of the 

establishment [ of] a decentralized asset reserve" that was "a non-profit initiative of the [LFG] to 

provide a further layer [of] support to maintain the UST's peg to the USD," that the LFG Reserve 

was "intended to remain as a decentralised asset reserve in perpetuity to the extent UST remains 

in circulation and is used by members of the community," and that "[n]either the [LFG] nor any 

of its Affiliates stand to profit from the proceeds of [the agreement] and/or (the LFG Reserve]." 

KWON signed the fundraising agreement on behalf of the LFG. 

Kwon 's Control of the LFG a,ul Use of Retroactive Accounting Tricks to Benefit Himself 

43. 1n truth, DO HYEONG KWON, the defendant, simultaneously controlled both the 

LFG and Terrafo1m at all relevant times following the creation of the LFG; operated the LFG as 

an rum of Terraform rather than as an independent entity; repeatedly made significant financial 

decisions for the LFG without the prior approval of the LFG Governing Council; and treated the 

LFG's funds as interchangeable with Tenafonn's funds when it suited KWON's interests. For 

example: 

a. Internal corporate records for the LFG show that KWON established the 

LFG Governing Council on or about January 10, 2022 only as a "non-director subcommittee" 

whose powers were limited to "advjs[ing] ru1d giv[:ing] recommendations" and performing acts 

"deemed necessary or advisable by the Directors . ... " The LFG was legally governed by a two­

person Board of Directors consisting of KWON and a Singaporean business consultant, the latter 

of whom was appointed a Director of the LFG solely to satisfy local Singapore regulations and 

32 



exercised no independent discretion or authority. Fw1ctionally, KWON exercised total control 

over the affairs of the LFG, a reality that was contrary to his representations to investors about the 

LFG's independence, decentralized governance, and status as a "cotmterweight" to Terraform. 

b. The LFG Reserve was not maintained in a "multisig" wallet controlled by 

the LPG Governing Council, as KWON had publicly claimed. In a May 8, 2022 message exchange 

between KWON and Trading Fhm Executive- I relating to the use of the LFG Reserve to protect 

UST's peg, Trading Firm Executive-I asked "will we need lfg multisig for settlement?" KWON 

responded, "no we will not we havent moved fw,ds there yet." Rather, the LFG Reserve was 

actually held in wallets controlled by KWON and not the LFG Governing Council. 

c. Of the approximately 80,000 bitcoin from the LFG Reserve that was 

purportedly spent to defend UST's peg in May 2022, the LFG Governing Council did not hold a 

vote on the expenditure of at least 28,000 of those bitcoin (worth over $800 million). In other 

words, at least 28,000 bitcoin worth of LFG assets were spent in violation of KWON' s promises 

to investors about the LFG's independence and governance, a result made possible by KWON's 

secret control of the LFG and its finances. After one council member learned ofthis unauthorized 

spending and told KWON that "I think it's important to highlight that most of these [LFG Reserve] 

transactions were executed without a vote," KWON responded that "with the community and 

every media outlet out with pitchforks not sure if its the best time to tlu·ow me under the bus." 

d. KWON commingled the assets of the LFG and Terraform, which allowed 

KWON to engage in after-the-fact accounting tricks to benefit himself at the expense of investors 

in the wake of the May 2022 crash. Specifically, after Terraform had already used a substantial 

amount of its own assets in one of its cryptocurrency trading accounts in an attempt to defend 

UST's peg in early May 2022, KWON caused the transfer of hundreds of millions of dollars' worth 

33 



of the LFG Rese1ve into that same trading account (the "Commingled Account") without the 

authorization of the LFG Goverrung Council. Later on, KWON attributed hundreds of millions of 

dollars' worth of prior spending on ultimately wo1thless assets (UST and LUNA) by Terraform­

spending using Tcrraform's own assets in Tenaform's own trading account- to the LFG. In an 

attempt to justify this retroactive accounting, KWON claimed that Tenaform had spent hundreds 

of mi llions of dollars' worth of its own assets "on behalf of' the LFG, with KWON reverse­

engineering the amount of this purported spending "on behalf of' the LFG to justify Terraform 

keeping almost all of the LFG's remaining bitcoin assets. KWON orchestrated this deception to 

maximize the amount of net trading losses in the Commingled Account attributed to the LFG 

(approximately $1 billion), and minimize the amount of net trading losses in the Commingled 

Account attributed to Terrafom1 (approxinlately $600 million). KWON engaged in this retroactive 

accounting without the approval of the LFG Governing Council, and was able to do so only 

because he secretly maintained the power to unilaterally control the LFG and its finances, in 

violation of his promises to investors about the LFG's independence and governance. 

e. After the crash of UST and LUNA, KWON used these retroactive 

accounting tricks as a cover to send a sigruficant portion of the LFG Reserve's remaining valuable 

assets (approximately 12,000 bitcoin worth over $300 million) to Terrafonn as purported 

"reimbursement" for earlier spending "on behalf' of the LFG. KWON took these actions as part 

of an effort to shield his spending of much of the LFG Rese1ve's remaining approximately 12,000 

bitcoin (the "Misappropriated LFG Funds") from public scrutiny. Indeed, after the crash, KWON 

made a commitment in the face of public pressure to distribute only the LFG's remaining funds to 

investors, but not Terrafo1m's remainfog funds, which KWON subsequently used in substantial 

34 



part for purposes that benefitted himself. After the May 2022 crash, the Misappropriated LFG 

Funds made up most of Terraform's assets. 

Money Laundering of Misappropriated LFG Funds 

44. DO HYEONG KWON, the defendant, and others acting at his direction, engaged 

in financial transactions and other conduct designed to conceal and disguise the natUJe, location, 

source, ownership and control of the Misappropriated LFG Funds. For example: 

a. KWON caused the transfer of Misappropriated LFG Funds through 

multiple cryptocunency addresses and accounts, engaging in "layering" transactions designed to 

conceal, among other things, the source of those funds. 

b. KWON caused the transfer of portions of the Misappropriated LFG Funds 

between blockchains, i.e., "bridged" the funds, in order to conceal their nature, location, source, 

ownership and control. 

c. Shortly after South Korean authorHies publicly announced criminal charges 

against KWON on or about September 14, 2022, KWON caused the transfer of Misappropriated 

LFG Funds into and out of centralized cryptocul1'ency exchanges within sho1t periods of time, thus 

concealing the path of those funds on public blockchains. For example, between on or about 

September 15, 2022 and on or about September 18, 2022, KWON caused the transfer of 

35 



approximately $39 million worth of bitcoin into and out of an account at the cryptocurrency 

exchange OKX that had been opened in 2018 (the "OKX Account"), as depicted below: 

9/IS 

9/ 17 

9/18 

1,959.29 
BTC 

~12.l0BTC 

497BTC 

647.J6BTC 

301.51 BTC 

487BTC 

277BTC 

232BTC 

J4S.32DTC 

301BTC 

30J,!>6BTC 

1959.28 
BTC 

As another example, dming the same time period, KWON caused the transfer of approximately 

$27 million worth of bitcoin into and out of an account at the cryptocmrency exchange KuCoin 

that was opened in 2019 (the "KuCoin Account"), as depicted below: 

9/15 

9/)6 

1,353.73 
BTC 

9/17 

9/18 

L1'1f( 

274.25 BTC 

241.l0BTC 

492,32 BTC 

344.22 BTC 

JIIITC 

275 BTC 

ll4.SDTC 

278BTC 

230BTC 

245,32DTC 

100,◄ I UTC 

1353.73 
BTC 

Both the OKX and the KuCoin Accounts were held in Ten-afo1m's name, and a copy ofKWON's 

passport, among other materials, was submitted to both exchanges in connection with those 

36 



accounts as part of "Know Your Customer" ("KYC") procedures. After Misappropriated LFG 

Funds were transferred into and then out of the OKX and KuCoin Accounts within a period of 

days, they were transferred to a Swiss bank account held by Terrafo1m (the "Terraform Swiss Bank 

Account"). Several days later, on or about September 21, 2022, Terrafonn transferred 

approximately $57 million from the Te1Taform Swiss Bank Account to a professional services firm 

retained by KWON and Terraform. 

d. Following public reporting about the transfer of Misappropriated LFG 

Funds to KuCoin and OKX, KWON made a number of false and misleading public statements 

disclaiming his use of OKX or KuCoin, including the following: 

1. KWON issued a September 28, 2022 social media post stating, in 

part, "i havent used kucoin or okex in at least the last year .... " 

n . KWON issued an October 5, 2022 social media post stating, in part, 

"I don't even use Kucoin and OkEx .... " 

111. KWON made a statement during the course of an interview on the 

cryptocunency program Unchained, distributed on or about October 18, 2022, that "I really have 

not used, you know, KuCoin or OKX or done any trading on those platforms, at least as far as I 

can remember, and I definitely don't have any funds there, and if they froze, I don't remember the 

amount, but if it' s like 67 million, I think I definitely would have noticed." When asked by the 

interviewer about analysis showing that approximately 65 million dollars' worth of the 

Misappropriated LFG Funds were sent to KuCoin and OKX, KWON responded, in pa1t, "Like, 

over video call I wouldn't be able to identify, like, an on-chain audit trail or something to that 

effect, but what would be helpful is we've hired a sort of on-chain analysis company and we've 

worked with them to provide all the trading data at LFG, so they should be publishfag a rep01t 

37 



shortly, which I think is going to provide a lot more clarity. So there isn 't any embezzlement, or 

you know, theft of funds or anything to that effect that seems to be cycling through the media." 

An image from that interview is reproduced below. 

Laura Shin Do Kwon 

Do Kwon of Terra: 'It Was Novtr Really About Money or F•m• or Success' - Ep. 408 

O Unchalntd .-_ 
0 •11, .. m r-<M" ~ 

0 151< QI h "'"' r+- ... 

45 . Rather than being used solely to defend UST's peg, or to reimburse investors for 

losses from the May 2022 crash, tens of millions of dollars' worth of the Misappropriated LFG 

Funds were used to pay professional services fees and expenses for DO HYEONG KWON, the 

defendant, and Ten:aform. 

46. 1n order to facilitate the transfer of Misappropriated LFG Funds to financial 

accounts that could be used to pay professional services fees and expenses, DO HYEONG KWON, 

the defendant, caused his agents to make representations to a financial services firm about the 

source of those funds that were not factually accurate, including representations that the funds 

were from software development fees and investment activities. In truth, the source of the 

Misappropriated LFG Funds was the LPG Reserve. Further, in response to inquiries relating to 

38 



anti-money laundering due diligence on the source of the transfers, KWON also caused his agents 

to provide a financial services film with a fake Costa Rican passport for KWON, among other 

materials. 

Kwon 's Distribution of a False and Misleading Audit Report to Cover Up His Crimes 

47. DO HYEONG KWON, the defendant, sought to cover up his lies and misconduct 

by, among other means, causing the distribution of a false and misleading "third party audit" report 

(the "Audit Report") by a consulting firm (the "Audit Firm") advertised by the LFG as providing 

"full transparency into the trading, blockchain records, and efforts" of the LFG and Terraform to 

defend UST's peg. An image of a social media post by KWON promoting the Audit Report is 

reproduced below: 

• Pinned Tweet 
Do Kwon O @stablekwon • Nov 16, 2022 

1/ A third party audit of LFG and TFL:s peg defense activity during May 
2022 has been published: 

0 LFG I Luna Foundation Guard @LFG o,g • Nov 16, 2022 

1/ Today, LFG releases the technical audit report conducted by JS 
Held, an experienced thi rd- party auditing firm , providing full 
transparency into the trading, blockchaln records, and efforts of LFG 
and TFL to defend t he price of TerraUSD ($UST) between May 8th & 
May 12th. 2022. 

Show this thread 

0 1,959 t.1. 1.177 0 3,621 

48. DO HYEONG KWON, the defendant, sought to cover up his lies and misconduct 

with the Audit Report not only to evade any sort of sanction for his crimes, but also to enable him 

to solicit funds from investors to launch a new Terra blockchain under false pretenses. 

49. DO HYEONG KWON, the defendant, caused the public distribution of the Audit 

39 



Report, as well as the distribution of the Audit Report to specific business pa1tners. For example, 

on or about November 14, 2022, before the Audit Report had been publicly released, KWON 

caused the distribution of the Audit Report to the Swiss bank at which the Tenaform Swiss Bank 

Account (containing laundered Misappropriated LFG Funds) was maintained, along with a 

message describing the Repo1t as "the results of an independent 3rd party audit into the LPG peg 

defense showing that all funds were used appropriately in defense of the peg." In fact, the Audit 

Rep01t was not conducted independently of KWON and Terraform, as they claimed. Among other 

things, KWON and his representatives sought to directly dictate certain portions of the report. For 

example, in an October 18, 2022 Audit Firm internal email, a senior employee of the Audit Firm 

noted with respect to certain passages in a draft version of the report that one ofKWON's agents 

had "dictated those paragraphs to us." 

50. On or about November 16, 2022, the day that the Audit Repo1t was publicly 

released, DO HYEONG KWON, the defendant, tweeted that it "shows that all LFG funds were 

spent to defend $UST's peg parity with the Dollar as declared" and that "we fought to the last to 

protect UST and its users." In truth, as discussed above, all LFG fonds were not spent to defend 

UST's peg. Rather, over $300 million in Misappropriated LFG Funds remained in the 

Commingled Accow1t after the crash of UST and LUNA, and were not used to defend the peg. 

Nor were those funds returned to the LFG. Rather, KWON directed after-the-fact that Terraform 

internally account for the Misappropriated LFG Funds as belonging to Terraform as 

"reimbw-sement" for Tenaform's own spending in defense ofUST's peg, and transfer those funds 

to Terrafonn wallets. 1n an effort to generate some "loose math" supporting this fraudulent, post­

hoc accounting, Terraform selected a period of time in the past dming which Tenaform spent 

approximately $1 billion in assets defending UST's peg, and attributed all Terraform trading 

40during that time period to the LFG. That period of time was selected to result in an amount 

approximating the LFG Reserve funds transferred to the Commingled Account. In other words, 

KWON directed Terrafonn to reverse-engineer the company's accounting to provide an excuse 

for Terraform to keep the Misappropriated LFG Funds. 

51. The Audit Report misleadingly omitted (1) that DO HYEONG KWON, the 

defendant, transferred over 28,000 bitcoin (worth approximately $800 million) from the LFG 

Reserve to Terraform without approval from the LFG Gove1ning Council, in violation ofKWON's 

promises to investors about the independence and governance of the LFG; (2) that KWON 

retroactively attributed Terraform spending on UST to the LFG based on an after-the-fact, "loose 

math" accounting fiction; and (3) that this was done not to enable the purchase of additional UST 

or LUNA but rather to shift financial losses from Terraform to the LFG after the fact for KWON's 

benefit. In other words, KWON used the Audit Report to obscure and hide the fact that he had 

lied to investors about the LFG's independence and governance, and engaged in accounting tricks 

to provide an excuse for Terraform to keep substantial amounts of the LFG's assets. 

41 



The Mirror Misrepresentations 

52. As discussed above, Mi1Tor was a Terraform product that purportedly operated as 

a decentralized system for creating, buying, and selling synthetic securities called "mAssets" using 

the Terra blockchain. Users could access Mirror through a web browser, as depicted in the image 

below of Mirror's user interface. 

DO HYEONG KWON, the defendant, lied to investors about the decentralized nature of Mirror, 

including falsely claiming that neither he nor Terraform controlled the protocol's governance or 

operation, and that Mirror's growth was driven by its users. In truth, KWON maintained 

significant influence over the governance of Mirror, manipulated Mirror asset prices, and inflated 

key metrics concerning Mirror's growth. 

Misrepresentations About the Control of Mirror 

53 . Terraform issued the cryptocmrency MIR as a "governance token" for Mirror, that 

42 



is, a type of cryptocurrency that allows holders to vote on decisions relating to the product, and 

thus can decentralize decision-making about how the product operates. 

54. DO HYEONG KWON, the defendant, claimed that neither he nor Terraform held 

any MIR tokens or otherwise controlled Mirror. For example: 

a. On or about December 3, 2020, KWON posted the following public 

statement on Twitter: "In order to maintain censorship resistance, Mirror is entirely decentralized 

from day 1 - the protocol is governed by the MIR token, setting economic parameters, controlling 

the on-chain community fond, and recommending code changes. TFL has no special owner / 

operator keys." 

b. Also on or about December 3, 2020, KWON caused Terraform to issue a 

press release asserting, among other things, that Mirror "is decentralized from day 1, with the on­

chain treasury and code changes governed by holders of the native token, MIR, of which Terrafonn 

Labs holds none. There are also no admin keys or special access privileges granted." 

c. In a podcast titled "The Delphi Podcast" that was publicly distributed on or 

about January 11, 2021, KWON made the following statements when asked about a potential 

"crackdown" on Mirror from U.S. authorities, in substance and in part: 

[A]s we were designing the protocol, we set aside no tokens for the 
team, no tokens for the investors. I received some Minor tokens as 
a function of having my LUNA stakes. But at the end of last year, I 
committed to give all that away to people that act11ally built the 
protocol. So I have nothing, Terra has nothing. And we have no 
governance .rights as a consequence of that. So this is something 
that we do not control, right? So even now, there's 30 different 
proposals that are up on governance. I think it just passed yesterday. 
None of those proposals were from us, it was entirely from the 
community, and the engagement as a consequence of being 
decentralized is huge. . . . The way that I think about it is, at this 
point, we don' t control or own any portions of the Mirror protocol. 
All we did was write code. And you cannot be prosecuted for what 
you do not control and nor do you profit from. 

43 .. 



d. In a podcast titled "Crypto 101" that was publicly distributed on or about 

March 11 , 2021, KWON made the following statements, in substance and in part: 

What we did when we launched Mirror is that we created a 
governance token called MIR which most project teams would 
either choose to retain for themselves or sell to investors or you 
know sell to the commw1ity in the open market. But we kept zero 
pre-mine for the team and then we gave all the tokens away to 
various people in the community . . . . Even if Mirror does well, 
like, nothing really happens to me, like, I don't benefit from it 
financially in any direct sense . .. .. So basically no control, no profit 
incentive, and then uh no owner keys .... 

55. In truth, DO HYEONG KWON, the defendant, and Terraform secretly maintained 

a large number of MIR tokens and exercised substantial control over Mirror, including by voting 

their MIR tokens and maintaining operator keys for Mirror. KWON, and others at Terraform 

acting at KWON's direction, lied to investors about these facts to further the illusion of Mirror as 

a decentralized system (which was one of KWON's principal marketing points for Mirror and 

Tenaform's products more broadly). For example, in internal Terraform messages sent on or 

about July 8, 2021, two Terrafom1 employees discussed how they had lied to the public about the 

decentralized nature of Mirror. Among other things, one of the employees ("Terraform Employee­

l ") stated that he "[n]eed[ed] to pray for forgiveness and repent" because he had just "spent an 

hour talking live" on a cryptocurrency livestream " [a]nd saying minor is decentralized." In the 

same message exchange, another Terrafonn employee ("Tenaform Employee-2") stated "mirror 

isn't decentralized," that it was a "fake it till u make it thing" to "provide the initial illusion to 

make em [investors] believers." Terraform Employee-2 also stated that he "can't belirve [sic] do 

just goes out and tweets TFL holds no MIR," to which Terraform Employee-1 responded "LOL." 

56. DO HYEONG KWON, the defendant, and others at Terraform sought to use the 

company's MIR tokens and blockchain operator keys to undetmine community proposals and 

44 



governance votes. For example, on July 20, 2021, a group of Terraform employees discussed 

using over three million MIR tokens controlled by Terrafmm to vote "no" on a Mirror community 

proposal. A few weeks later, on or about July 26, 2021, KWON stated in a message to another 

Tenafonn employee ("Terraform Employee-3") that "we need to forfeit operator key to 

governance" of Mirror, a reference to the fact that Terraform held a privileged operator key for 

controlling Mi1rnr even though KWON had pubUcly disclaimed that fact. Terrafonn Employee-3 

later told KWON that Te1Taform should limit the number of times it made use of its power to 

control the governance of Mirror and vote down co nun unity proposals, noting that "if this happens 

enough, most people will realize it's the same whale suddenly shooting down the proposals." 

Misrepresentations About the Operation of Mirror 

57. DO I-IYEONG KWON, the defendant, and others acting at his direction, claimed 

the prices of mAssets were set principally by decentralized processes, and not controlled by 

Terraform. Specifically, the price of an mAsset at the time of its creation was supposed to be 

determined by a "pricing oracle" that used data from a decentralized pricing service. After the 

creation of an mAsset, its price was purportedly determined by a decentralized market of buyers 

and sellers. Mi1Tor's rules relating to the posting and redemption of collateral for mAssets 

supposedly created an economic incentive structure that would cause the price of mAssets to track 

the price of the traditional assets that they "mirrored" without any centralized control by 

Terraform. In other words, the Min-or pricing oracle did not automatically dete1111ine the price of 

an nlAsset following that asset's creation; rather, built-in economic incentives for mAsset traders 

relating to the value of posted collateral (specifically the oppo1twlity for arbitrage) were supposed 

to keep mAsset prices pegged to their corresponding traditional asset prices without the need for 

any centralized control or inte1vention by Terraform. KWON explained this purportedly 

45 



decentralized process during an interview on the podcast titled "The Defiant" that was distributed 

on or about Apri l 16, 2021, during which KWON represented that the prices of mAssets remained 

pegged to their underlying assets with "no centralized counterpru.ties." 

58. However, in truth, DO HYEONG KWON, the defendant, caused Terraform itself 

to supply certain price data used by Mirror, rather than relying on a third-party decentralized data 

feed for all of Mirror's price oracles. Additionally, KWON caused Terraform to secretly fund and 

operate trading bots on Minor (which Terraform referred to internally as "MM bots") to keep 

mAsset prices in line with the prices of the traditional assets they purportedly "mil1'ored," as 

opposed to relying on decentralized mru.·ket processes. In other words, Mirror's decentralized 

mechanism for keeping the price of mAssets pegged to their underlying traditional assets did not 

work, and so KWON used robotic accounts masquerading as users to manipulate m.Asset prices 

for the entire time Mirror operated. An intemal Terraform document explicitly outlined this 

process, explaining, among other things, how "MM bot is managing to bring the mAsset price 

within a set range by placing a counter order when the price is out of the range in Oracle," and that 

if the secret Terraform MM bots were not used then "the mAsset may be highly unlikely to track 

its underlying asset accurately." 

59. DO HYEONG KWON, the defendant, was never able to get Mirror to function in 

the decentralized fashion that he advertised. On or about August 9, 2021, approximately nine 

months after Mirror launched, KWON acknowledged to Terrafo1m Employee-3 that he was still 

seeking a "solution to arb[itrage] MAssets to oracle prices to minimize our need to have to conduct 

operations to the peg," i.e., to find a way to keep mAsset prices pegged to their "mirrored" 

traditional assets without Tenaform secretly funding and operating MM bots. KWON further 

stated to Terraform Employee-3 that "we need to be hands off on all terra side mirror operations 

46 



in a couple months." However, because of the ineffectiveness of Mirror's design, KWON 

continued secretly deploying the MM Bots and substantial capital to manjpulate mAssets through 

the crash of UST and LUNA in May 2022. 

60. DO HYEONG KWON, the defendant, used the Genesis Stablecoins to fund the 

MM bots and their manipulation of the mAsset market. In total, KWON used over $85 million 

worth of the Genesis Stablecoins in this manner to deceive investors about the decentralized 

operation of Mirror. 

Misl'epl'esentations About tile Extent of Mirror Usage 

61. DO I-IYEONG KWON, the defendant, caused Terraform to promote Mirror (and 

the Terra blockchain more broadly) based on metrics purporting to show Mirror' s widespread 

adoption by users, including (a) the total amount of collateral posted to mint mAssets; (b) the total 

amount of "liquidity" on Mirror, i.e., mAssets and UST available on Minor exchanges; (c) the 

total amount of staked MIR tokens; and (d) "Total Value Locked" (or "TVL") on Mirror, i.e. , the 

total combined amount of collateral, liquidity, and staked MIR tokens. For example: 

a. On or about December 15, 2020, less than two weeks after Mirror launched, 

KWON sent an email to investors stating that "Minor launch went very well - there is now lO0M 

USO in total value locked on mirror .... " 

b. On or about January 23, 2021, KWON tweeted about Mirror, in substance 

and in part, " l lM daily trading volume / 230M tvl in stock synthetics @mirror_protocol in 6 

weeks." 

c. On or about February 12, 2021, KWON tweeted about various Mirror 

metrics, including that Mirror had "TVL: 400M UST" and "mAsset Liquidity: 200M," and KWON 

concluded his tweet by writing "(Pats self on the back)." 

47 



d. On or about March 9, 2021, KWON tweeted, "Welcome @mirror_protocol 

to the lB TYL club." 

e. On OI about April 11, 2021, KWON tweeted about Minor having $1.8 

billion in TYL, stating, "1.8B TVL is offensive," i. e., that this amount was a very substantial 

quantity of TYL. 

f. On or about June 25, 2021, KWON caused the publication of an article on 

an online platform touting Mirror's widespread adoption by users, including claiming that in its 

first six months "Mirror crossed 2 billion in TVL and 1 billion in liquidity ... making Mirror a top 

15 DeFi protocol and leading cross-chain protocol." The aiticle included an image from Mirror's 

website illustrating these metrics, including tl1e chart depicted below showing that Minor at the 

time had neai·ly $2 billion in TYL, nearly $1 billion in liquidity, and over $800 million in collateral. 

62. However, in truth, DO HYEONG KWON, the defendant, caused Terraform to 

inflate key Mirror metrics to deceive investors about the extent of Mirror's adoption and 

decentralization. Specifically, KWON caused Terraform to engage in a significant amount of 

transactions on Miirnr using its own accounts in order to inflate collateral, liquidity, MIR staking, 

and TYL metrics. For example, Terraform's own accounts were responsible for almost all of the 

48 



collateral posted on Mirror in its first six months, and a substantial majority thereafter, as depicted 

in the chart below. 

'l'olal Collateral Mirror Protocol (USO) 

1000 M 

800 M 

Q) 

~ 600 M 

51 
::, 

100M 

200 M 

0ML-----.------,.------r----..-----,.----,----,----,--------' 
Jon-2021 Mar-2021 Moy-2021 Jul-2021 Sep-2021 Nov-2021 Jan-2022 Mor-2022 May-2022 

Collateral (TFL Addresses) Collateral (Non-TFL Addresses) 

Terrafonn's own accounts also accounted for up to approximately 40% of liquidity and up to 

approximately 60% ofTVL on Mirror, as depicted in the charts below . 

....----..::™=·'-==k"" v,i .. [TV!.) Mlm>r l'n>locd l]J~Dj, ___ __, 

1000 M 
IOOOM 

,oo,., 

I tOO ►l 
0 

IOOOM 

! 
~ 

Q 

~ 1000),t 

ilOGM 

lOOM 

When KWON caused Terraform to promote Mirror as achieving the milestone of having $1 billion 

in liquidity and $2 billion in TVL, Ten-aform's accounts were actually generating over $400 

million of that claimed liquidity and approximately $ 1 billion of that claimed TYL. 

49 



The Chai Misrepresentations 

Kwon Claimed Chai Used tlte Terra Blockcliain to Process Payments 

63. One of the principal ways that DO HYEONG KWON, the defendant, promoted 

the Tel1'a blockchain to investors was touting its "real-world" usage by the Korean payment 

application Chai beginning in or about June 2019. KWON claimed that Chai used a Terraform 

stablecoin pegged to the Korean Won called TerraKRW ("KRT"), which operated on the Terra 

blockchain using the same algorithmic mechanism as UST, to process transactions for millions of 

users and billions of dollars in transactions. This purportedly demonstrated the potential for 

widespread adoption of the Terra blockchain and the generation of significant transaction fees for 

investors who "staked" their LUNA tokens, i. e., locked up their LUNA tokens within the system. 

As discussed above, an increase in the number of transactio_ns on the Tel1'a blockchain would lead 

to greater rewards for LUNA investors who staked their tokens. 

64. DO HYEONG KWON, the defendant, used emails and public aiticles, among other 

means, to promote Chai to investors as a purported real-world application of the Terra blockchain. 

For example: 

a. On or about December 10, 2018, KWON caused a promotional email to be 

sent to investors stating that there was a need in the cryptocw-rency industry for "projects that 

achieve real world adoption beyond whitepapers and fluffy concepts." The email claimed that 

when Chai was launched, it would be "a product that is easy to integrate for e-commerce partners 

and seamless to use for consumers" because it would not require customers "to sign up for 

exchanges, manage wallets and store private keys," and that Terrafom1 would "separate the 

branding for the payment service with that of the underlying blockchain technology." 

50 



b. On about June 21, 201 9, KWON published an article touting how "75k 

unique shoppers" in Korea used Chai to make purchases w011h a total of 1.5 billion Korean won, 

and proclaiming that "Chai's launch is not only a victory for Terra but also for the blockchain 

industry as a whole." In the ru1icle, KWON stated "[ w ]eve been getting a lot of questions regarding 

how Chai uses Terra's blockchain," and the answer was that "[q]uite simply, Chai runs, records 

transactions, and manages account balances on Terra's Columbus mainnet." 

c. Later, on or about July 26, 201 9, KWON published a "Terra Community 

Update" referring to Chai as ''Terra' s blockchain-powered payments app" that would allow 

"anyone to easily buy their morning coffee with Terra," claiming that in the 

"40 days since Chai launched using the Terra Protocol" it was "already ... one of the most heavily 

used blockchain applications in existence." 

65 . DO HYEONG KWON, the defendant, publicly attributed Chai's commercial 

success at least in part to the Terra blockchain allowing Chai to operate at lower costs and higher 

speeds than Chai's competitors. For example: 

a. On or about October 14, 2019, KWON represented in a CNBC presentation 

that "Chai's unique value proposition is enabled by Terra's cutting-edge blockchain technology," 

51 



as depicted in the image below: 

~ C O ii youtub1.com/w•lch?v•1<iGalxADnbc 

- D VouTube l tfrl luna p,o,notlonal vldto 

CHAI 's unique value proposition is enjbled by 
Terra's cutting-edge blockchain technology 

... 

, 4,I06vltw1 Ott 14, 2019 
W11ct1 Tt111'1 Co-FounCtr 00 Kwen tJpl1ln how Koru wfl $00n run on Ttrrt't blo(~(ha,n p1ymtn11 rt•lWorlc Thi, p1eun1ttlon wo ol,,tn 111 five '1ltnlft0 ot CNBC Crypto T,11:M, In ~toul South 
Ko:ci. 

b. KWON caused Terraform to publish an article on or about October 24, 2019 

claiming that "CHAI utilizes Terra's blockchain and stablecoin economy to offer lower transaction 

fees and fund ongoing discounts." The article asserted that "[w]hile most merchants pay about 

2.5% ~ 3% as transaction fees we replace the complicated value chain with a single blockchain 

layer to offer rates as low as 0.5%. Assuming that we've saved at least 1.5% on transaction fees 

for our partners, we can estimate our current savings to be $810,000." 

c. On or about November 22, 2019, KWON sent an email to a U.S. investor 

attaching a Chai promotional document stating that "CHAI ' s unique value proposition is enabled 

52 



by Terra's cutting-edge blockchain technology," and that "CHAI's transactions are facilitated by 

a fully collateralized stablecoin that maintains price stability via a protocol that dynamically 

adjusts money supply." The promotional document included the fo llowing graphic demonstrating 

how Chai purportedly used the Terra blockchain to settle transactions rather than traditional 

payment processing mechanisms: 

CHAI delivers a low processing fee 
by replacing the cluttered payment value chain 
with a single blockchain layer 

USER 

MERCHANT 
PLATFORM 

Kwon Falsified Data to Fraudulently Claim that Cltai 
Processed Transactions on tlte Terra Blockchabt 

USER 

MERCHANT 
PLATFORM 

.. 

66. In truth, Chai processed transactions through traditional payment rails operated by 

established financial institutions, not the Terra blockchain. DO HYEONG KWON, the defendant) 

configured Chai to use traditional bank rails rather than the Terra blockchain due to regulations 

concerning electronjc-payment businesses in South Korea. At the time of Chai's launch, KWON 

understood that South Korean financial regulators were not prepared to issue electronic-payment 

licenses to companies that used cryptocurrency or other blockchain technology to process 

payments. In order to obtain such licenses, KWON arranged for Chai to use traditional bank rails 

53 



to process payments, and not cryptocw-rency or other blockchain technology. 

67. Despite knowing that Chai used traditional bank rails to process its trnnsactions, 

DO HYEONG KWON, the defendant, nonetheless fraudulently promoted Chai to investors in the 

United States and other locations as using blockchain technology to process payments. KWON 

sought to deceive investors in this maimer because being truthful with investors about Chai's use 

of traditional bank rails would have undermined one of the principal talking points that KWON 

used to distinguish his business from competitors and raise capital. As discussed above, KWON 

touted Chai's purported use of the Terra block.chain to process transactions as a key vehicle for 

increasing the nwnber of stabl.ecoin transactions on the Terra block.chain, and thus generating 

higher rewards for investors who staked LUNA tokens. Especially in Terrafonn's early years, 

KWON viewed Chai's generation of transaction fees for LUNA stakers as critical to the success 

ofTen-aform's business. KWON worried that a low volume ofblockchain transactions (and thus 

low staking rewards) would result in investors selling rather than staking their LUNA tokens, 

creating a glut of LUNA in the market and driving down its price. 

68. Indeed, in the month before Chai launched, DO HYEONG KWON, the defendant, 

was so concerned about the need to generate transaction fees for LUNA stakers at that time that 

he contemplated an interim scheme to fake Terra block.chain transactions whHe he was preparing 

to launch Chaj , KWON discussed this interim scheme with the Co-Founder on an electronic 

communication platform on or about May 9, 2019. In that discussion, KWON wrote a message to 

the Co-Founder asking whether he should "do fake transactions" on the Terra blockchain "to 

generate staking returns" that could be funded by the Genesis Stablecoins. The Co-Founder 

expressed that "we probably need a story" as to the source of the fake blockchain transactions. 

KWON later wrote to the Co-Founder that "i can just create fake transactions that look real ... 

54 



which will generate fees ... and we can wind that down as chai" grows." When the Co-Founder 

responded by expressing concern that users and investors would "find out it's fake;" KWON 

replied, " [a]ll the power to those that can prove its fake ... because i will try my best to make it 

indiscemabJe .. . i wont tell if you wont ® " The Co-Founder then stated; "Haha ... Well let's 

test in small scale and see what happens Q " 

69. Once Chai launched in or about June 2019, DO HYEONG KWON, the defendant, 

and his co-conspirators "rni1Tored" Chai transactions on the Terra blockchain through an 

automated process to create the illusion for investors in the United States and other locations that 

Chai processed transactions thJOugh the Tena blockchain. KWON initially engineered these fake 

blockchain transactions by transferring small amounts of stablecoins between wallets that he 

controlled. Over time, he caused the implementation of more sophisticated methods of fabricating 

Chai transaction data on the Te1rn blockchain, such as faking patterns of transactions designed to 

make some wallets appear to belong to sellers and others appear to belong to buyers. KWON used 

over $60 million worth of the Genesis Stablecoins to fund these fraudulent efforts. 

70. DO HYEONG KWON, the defendant, and others acting at his direction, sought to 

suppress public reporting about Chai's use of traditional bank rails to process payments. For 

example, after a Korean-language news website published an article on or about June 16, 2019 

reporting that Chai did not use stablecoins due to South Korea financial laws and regulations, a 

TetTaform employee ("Terraform Employee-4"), acting at the direction of KWON, sought to have 

an editor at the news website revise portions of the article. On or about June 18, 2019, Terrafom1 

Employee-4 infom1ed KWON that the editor stood behind the accuracy of the article since Chai 

did not have "a direct connection to stablecoins." Terraform Employee-4 further informed KWON 

that the editor "understands that we wish to soften the language at the very least, but she is not 

55 



willing to," and "[g]iven that [the editor] even hinted that she knows we chose this path due to reg 

risks, I think we should let it be." 

71. Terraform and Chai Co. employees discussed the fabrication of Terra blockchain 

data to mirror Chai transactions with DO HYEONG KWON, the defendant. For example, in one 

email in or about May 2020, a Chai Co. employee emailed with KWON and others about how to 

implement transaction processing for another payment application that purportedly used the Terra 

blockchain (a payment service in Mongolia called memePay), asking whether they should "follow 

the same structure as Chai to process transaction outside blockchain ... But write a record on 

Terra block.chain in parallel." A Ten-aform employee responded, "I thinking copying Chai 

structure would be the best choice for now." 

Lies to South Korean Regulatots 

72. DO HYEONG KWON, the defendant, worried that South Korean financial 

regulators would learn about the steps he had taken to deceive investors about Chai's use of the 

Terra block chain, including the creation of financial and technological connections between Chai 

and Ten-afo1m (such as the mirroring of Chai transactions on the Terra blockchain) to create the 

illusion that Chai was a blockchain-based payments system. As a result KWON and his 

subordinates at Terraform took steps to hide those deceptive acts from regulators. For example, 

on or about March 28, 2019, KWON instructed Terraform employees working on blockchain 

projects not to come into Terraform' s office when South Korean financial regulators conducted an 

in-person inspection relating to Chai's application for financial licenses, and Terrafonn's Chief 

Information Security Officer directed employees that "when you leave the office later today, please 

remove any items and interior decorations related to Terra so that they are not visible" when 

56 



regulators were present. 1 

73. At the same time that DO HYEONG KWON, the defendant, sought to hide any 

business connections between Chai and Ten-aform from South Korean regulators, KWON touted 

such connections to investors to promote the lie that Chai used the Terra blockchain to process 

payments. For example, on or about April 10, 2019, KWON caused an email to be sent to investors 

touting how South Korean regulators had granted electronic payment licenses to Chai, that " [t]hese 

licenses are necessary for any payment gateway facilitating the settlement of users' funds," and 

that Chai was the "1st crypto firm ... to be granted these licenses" which "demonstrates Chai's 

unique ability to navigate difficult regulatory waters." Shortly after that promotional email to 

investors was sent, Terraform employees expressed concem through an internal Tenaform 

messaging platform that South Korean regulators would learn about the email, with Terraform 

Employee-4 noting, "Ugh a foreign investor said they will promote this on their [social media] 

channel," and other employees responding "No! That cannot happen!! l ! ! ! Oh my god!!!!!" and "I 

pray I pray for that to please not happen," among other things. Terraform Employee-4 then 

expressed hope that the substance of the promotional email would not ultimately reach South 

Korean regulators because the foreign investor who planned to publicize the promotional email 

was not in South Korea, stating, "(t]here shoul.dn 't be any big issues since the investor is an Italian, 

. h ,, s1g .... 

74. In sum, DO HYEONG KWON, the defendant, advanced conflicting narratives 

about Chai depending on his audience, and in the process told different lies to investors, business 

partners, and regulators. Terra.form employees repeatedly expressed concerns within the company 

about these false and conflicting statements. For example, Tenaform Employee-4 raised concerns 

1 These quotations, and those in Paragraph 73 of this Indictment, are translations of the original 
Korean language communications. 

57 



with the Co-Founder about publicizing :financial connections between Terraform and Chai with 

reporters, sending a message to the Co-Founder on or about June 13, 2019 that "my dilemma is 

that [at the moment], as Do pointed out, we are not being honest with the media," and that if 

Tenaform disclosed certain financial payments to Chai, "we'd be put in an awkward situation 

where we have lied to the banks, to whom we promised both verbally and in writing that CHAI 

has nothing to do with Terra/cryptocurrency." 

The Separation of Terraform aml Chai and the ''Look the Other Way" Agreement 

75. lo or about March 2020, DO HYEONG KWON, the defendant, and the Co-Founder 

separated the business operations ofTerraform and Chai Co. KWON sent an email to Tenaform 

employees on or about March 2, 2020 explaining that the split was the product of "the tension 

between Terra's mandate to challenge the boundaries of traditional finance, and Chai's need to be 

fully compliant with existing regulations as a licensed entity." KWON further explained that 

"[p)ost split, Chai will double down on growing as a successful payments company within the 

botmds ofregulatory tolerance," and that "[m]uch of that will have nothing to do with Terra" with 

the exception of Chai "facilitate[ing] direct Terra topups," i.e., loading tokens to a cryptocurrency 

wallet. In other words, KWON acknowledged in an internal Tenafonn email that, at least as of 

March 2020, Chai's only relationship to the Terra blockchain would be serving as a means of 

funding cryptocunency wallets, and that Chai would not process transactions through the Terra 

blockchain. 

76. But after Terraform and Chai Co. separated, DO HYEONG KWON, the defendant, 

sought to ensure that he could continue to fraudulently represent Chai transactions as taking place 

on the Terra blockchain. KWON inWally sent a wr.itten proposal to the Co-Founder stating "I ask 

that Terra be able to continue public representation of Chai transaction volumes as its own over 

58 



the next two years, and that Chai continue to support that nanative unless materially unfavorable 

to do so." KWON eventually secured a written agreement from the Co-Founder on or about 

October 27, 2020 that Terraform would have the right for three years to "represent Chai Wallet as 

a DApp [decentralized application] on Terra' s blockchain," and that Chai Co. would "not 

contradict, or make any independent representations which would otherwise contradict, such 

representations made by Terra in respect thereof." After the agreement was signed, KWON 

continued to make public misrepresentations about Cha.i's use of the Terra blockchain, and the Co­

Founder subsequently explained to another Chai Co. executive that he had a "look the other way" 

agreement concerning KWON's misrepresentations about Chai using the Te1rn blockchain. 

77. After Terrafom1 and Chai Co. separated, and a Chai Co. executive expressed 

concern to the Co-Founder during a recorded conversation about the "fraudulent" nanative that 

Chai used the Terra blockchain to process transactions, the Co-Founder responded by stating, in 

substance and in pa1t, "it does bother me somewhat morally that the narrative is off. But that's not 

- I don't think [it's] your problem, and I think it's not necessarily my problem either. I think it's 

Do [Kwon]'s problem." When the other Chai Co. executive reiterated that "there is no 

involvement of actual Terra stable coins in Chai," the Co-Founder responded, "Yeah, but why 

does that matter?" 

78. DO HYEONG KWON, continued making misrepresentations about Chai's use of 

the Terra blockchain in in 2021 and 2022. For example, in a podcast titled "Exponential View" 

that was distributed on or about January 12, 2022, KWON stated about Chai, "the value proposition 

as you said is pretty simple, the idea is that instead of having to wait multiple days and have to pay 

egregious fees in order to get your settlement through ... merchants can get settled very quickly 

so instead of multiple days it could be say 6 seconds which is the average block time of the tena 

59 



blockchain, and then the fees are also structurally much lower, I think about 50 to 60% what 

merchants are forced to pay on net using traditional payment gateways." 

The Genesis Coin Misrepresentations 

Background on the Ge1tesis Stablecoins 

79. DO HYEONG KWON, the defendant, publicly raised questions about whether it 

was fail' and appropriate for cryptocurrency developers to "pre-mine" their tokens for their own 

benefit, i.e., creating or "mining" a quantity of tokens for their own benefit before offering tokens 

to the public. In the October 2021 Unconfirmed Pod cast, KWON spoke about potential regulations 

for cryptocurrencies, such as "things like having no pre-mine of the asset, so fairly distributing the 

asset at launch." KWON also suggested that a cryptocw-rency pre-mine was an "unfair advantage" 

over investors that could result in a token being considered a secmity, stating: "I feel like if there's 

no pre-mine to the asset in the sense that the developer doesn't have an unfair advantage when the 

asset is issued, then it cannot be a secmity ... . It seems like a pretty good reason you shouldn't 

have any financial responsibility if you didn't have any unfair financial gains." 

80. However, as discussed above, DO HYEONG KWON, the defendant, programmed 

the Terra blockchain at its creation in or about 2018 to include pre-mined tokens which he used 

for his own pmposes and benefit. Specifically, KWON programmed the Terra blockchain to 

include one billion stablecoins (the Genesis Stablecoins) and one billion LUNA The Genesis 

Stablecoins consisted of a Terraform stablecoin called TerraSDR (abbreviated as SDT), which was 

pegged to a financial unit used by the International Monetary Fund called Special Drawing Rights 

or "SDR," that is based on a basket of five currencies (the U.S. dollar, the Euro, the Chinese 

Remminbi, the Japanese Yen, and the British Pound Sterling). SDT was not a widely used or 

traded stablecoin on public cryptocurrency exchanges. KWON programmed the Terra blockchain 

60to make 10% of the Genesis Stablecoins available to Terraform each year, i.e., to "unlock" 100 

million SDT on an annual basis. Terraform ultimately received a total of 300 million of the 

Genesis Stablecoins before a Terra blockchain governance vote was held in or about late 2021 to 

"burn" the remainder of the Genesis Stablecoins. 

Kwon Provides Limited, SltifUng, aml Knowingly False Disclosures 

81. DO HYEONG KWON, the defendant, provided limited, shifting, and knowingly 

false disclosures about the Genesis Stablecoins to his investors. 

82. Ea:rly Terrafo1m promotional materials such as the 2018 Private Offering 

Document represented that the "primary" use of the Genesis Stablecoins would be to fund 

ecommerce discounts for business pa1tners, distribute free tokens to existing users to promote 

Terraform's business (known as "airdrops"), and grow the Terra "ecosystem" (a term used by 

KWON to refer to the universe of products and systems that operated on the Tell'a blockchain). 

83. After Terraforrn conducted its initial seed rounds of investor fundraising in 2018, 

DO HYEONG KWON, the defendant, generally did not include disclosures about the Genesis 

Stablecoins in Terraform's promotional materials. Still, between 2019 and 2021, KWON made, 

and caused to be made, occasional statements on social media platforms and internet message 

boards about the Genesis Stablecoins, including in response to questions from users who 

discovered the Genesis Stablecoins on the Terra blockchain and inquired about their pw·pose. In 

these statements, KWON repeatedly changed his explanation for the purpose and use of the 

Genesis Stableco.ins. For example: 

a. In June 2019, after a user observed on social media that that they had located 

a wallet on the Terra blockchain holding the Genesis Stablecoins and asked about their purpose, 

KWON responded that the Genesis Stablecoins would be used "to engage in Luna <> Terra swaps 

61 



to stabilize pegs." 

b. In January 2020, KWON provided another explanation: the Genesis 

Stablecoins were being used to supply stablecoins to Chai "whenever they run out ofTe1Ta tokens 

to provide to new users." 

c. In November 2021, KWON posted on a public message board that he had 

used the Genesis Stablecoins to mint other Terra stablecoins "when the cost of minting have been 

prohibitively high to do Luna<->stablecoin swaps." KWON represented in the post that, out of 

the 300 million of the Genesis Stablecoins had been released to Terrafonn through the annual 

"unlocking" process, approximately 100 million had been used to mint KRT "mainly used to 

facilitate transactions for Chai" and that approximately 180 million had been used to mint UST 

"to provide liquidity" in various decentralized cryptocurrency exchanges. 

84. In truth, DO HYEONG KWON, the defendant, did not use the Genesis Stablecoins 

solely for the purposes set forth in even his limited and shifting disclosures to investors. Instead, 

as djscussed above, KWON used at least $145 million wo1ih of the Genesis Stablecoins for 

fraudulent purposes. The Genesis Stablecoins were not "mainly used to facilitate transactions for 

Chai," but rather, as discussed above, to fake Chai transactions on the Terra blockchain. The 

Genesis Stablecoins were also not used simply to "provide liquidity" on decentralized exchanges, 

but rather, as discussed above, to fund trading bots that manipulated the price of rnAssets because 

Mirror did not function as advertised. 

85. In swu, DO HYEONG KWON, the defendant, used substantial amounts of the 

Genesis Stablecoins as a slush fund to finance fraudulent activities designed to create the false 

appearance of widespread adoption of the Terra blockchain and the decentralization ofTerraform 

products. 

62 



COUNT ONE 
(Conspiracy to Defraud) 

86. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, and others known 

and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and 

with each other to commit offenses against the United States, to wit, (a) commodities fraud, in 

violation of Title 7, United States Code, Sections 9(1) and 13(a)(5) and Title 17, Code of Federal 

Regulations, Section 180.1; (b) securities fraud, in violation of Title 15, United States Code, 

Sections 78j(b) and 78ff and Title 17, Code of Federal Regulations, Section 240.1 0b-5; and (c) 

wire fraud, in violation of Title 18, United States Code, Section 1343, to wit, KWON agreed with 

others to defraud individuals selling digital commodities in exchange for cryptocurrencies issued 

by Terraform, including LUNA and UST, by deceiving those individuals about products, systems, 

and entities that operated (or purported to operate) on or in connection with the Terra blockchain, 

including Chai, Minor, the Genesis Stablecoins, and the LFG. 

87. It was a part and object of the conspiracy that DO I-IYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indirectly, used 

and employed, and attempted to use and employ, in connection with a swap, a contract of sale of 

a commodity in .interstate and foreign commerce, and for future delivery on and subject to the rnles 

of a registered entity, a manipulative and deceptive device and contrivance, in contravention of 

Title 17, Code of Federal Regulations, Section 180.1, by: (1) using and employing, and attempting 

to use and employ, a manipulative device, scheme, and artifice to defraud; (2) making, and 

attempting to make, untrne and misleading statements of material fact and omitting to state 

material facts necessary in order to make the statements made not untrue or misleading; and 

(3) engaging, and attempting to engage in acts, practices, and cow-ses of business which operated 

63 



and would operate as a fraud and deceit upon other persons, in violation of Title 7, United States 

Code, Sections 9(1 ) and 13(a)(5). 

88. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indirectly, by 

use of the means and instrumentalities of interstate commerce, and of the mails and of the facilities 

of national secmities exchanges, used and employed, in connection with the purchase and sale of 

securities, manipulative and deceptive devices and contrivances, in violation of Title 17, Code of 

Federal Regulations, Section 240.l0b-5, by: (a) employing devices, schemes, and artifices to 

defraud; (b) making untrue statements of material fact and omitting to state mater ial facts 

necessary in order to mak.e the statements made, in the light of the circumstances under which they 

were made, not misleading; and (c) engaging in acts, practices, and courses of business which 

operated and would operate as a fraud and deceit upon persons, in violation of Title 15, United 

States Code, Sections 78j(b) and 78ff. 

89. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, knowingly having devised and intending to devise a 

scheme and artifice to defraud, and for obtaining money and property by means of false and 

fraudulent pretenses, representations, and promises, would and did transmit and cause to be 

transmitted by means of wire, radio, and television communication in interstate and foreign 

commerce, writings, signs, signals, pictures, and sounds for the pwpose of executing such scheme 

and artifice, in violation of Title 18, United States Code, Section 1343. 

Overt Acts 

90. In furtherance of the conspiracy and to effect the illegal objects thereof, the 

following overt acts, among others, were committed in the Southern District of New York and 

64 



elsewhere: 

a. DO HYEONG KWON, the defendant, distributed the 2018 Private Offering 

Document representing that the "primary" use of the Genesis Stablecoins would be to fund 

ecommerce discounts for business partners, distribute free tokens to existing users to promote 

Terraform's business, and grow the Terra "ecosystem." 

b. Between in or about 2019 and in or about 2022, KWON used millions of 

dollars' worth of Genesis StabJecoins to fund fake Chai transactions on the Terra blockchain. 

c. On or about October 12, 2020, KWON sent an email to a representative of 

an investment firm based in New York containing a Terraform promotional document falsely 

claiming that Chai used the Terra blockchain to settle transactions rather than traditional payment 

processing mechanisms. 

d. On or about October 14, 2019, KWON made a false and misleading 

statement during a CNB C presentation transmitted to, among other places, the Southern District 

of New York, about Chai's usage of the Tena blockchain. 

e. On or about November 22, 2019, KWON sent an email to a U.S. investor 

attaching a Chai promotional document that included a false and misleading statement about Chai 

using the Tena blockchain to process transactions, including the statement that "CHAI's unique 

value proposition is enabled by Terra's cutting-edge blockchain technology," and that "CHAI's 

transactions are facilitated by a fully collateralized stablecoin that maintains price stability via a 

protocol that dynan1ically adjusts money supply." 

f. On or about December 3, 2020, KWON posted false and misleading public 

statements on Twitter about Mirror, including that "Mirror is entirely decentralized from day l " 

and "TFL has no special owner / operator keys." 

65 



g. On or about December 3, 2020, KWON caused Terraform to issue a false 

and misleading press release claiming that Mirror "is decentralized from day 1," that Terraform 

held no MIR tokens, and that "[t)here are also no admin keys or special access privileges granted." 

h. Between in or about 2020 and in or about 2022, KWON used Genesis 

Stablecoins to fund trading bots that manipulated the price of mAssets. 

1. On or about January 11 , 2021, KWON made false and misleading 

statements on a podcast about Minor that were transmitted to, among other places, the Southern 

District of New York, including assertions that neither he nor Terraform possessed any MIR 

tokens "[a]nd we have no governance rights as a consequence of that .. .. The way that I think 

about it is, at this point, we don't control or own any portions of the Mirror protocol." 

J. On or about August 9, 2021, KWON sent a message to Terra.form 

Employee-3 about trying to find a "solution to arb[itrage] MAssets to oracle prices to minimize 

ow- need to have to conduct operations to the peg." 

k. On or about January 19, 2022, KWON caused Tell'aform to issue a false 

and misleading tweet asserting that "[t]he LFG is governed independently by an international 

Council of industry leaders and experts .... " 

1. On or about January 19, 2022, KWON issued a false and misleading tweet 

that the LFG would serve as "a counterweight to TFL [Terraform] in the @tena_money 

ecosystem" and that "( d]ecentralization wins." 

m. In a podcast interview that was distributed on or about March 29, 2022, 

KWON falsely stated that the approximately $3 billion worth of bitcoi.i1 held in the LFG Reserve 

at the time was held by the LFG Governing Council in secure multisig wallets. 

66 



n. On or about November 16, 2022, KWON caused the distribution of an audit 

repo1t that sought to obscure and hide the fact that KWON had retroactively shifted hundreds of 

millions of dollars in trading losses from Terraform to the LFG to provide an excuse for Terraform 

to keep substantial. amounts of the LFG's assets, used funds from the LFG Reserve in ways that 

substantially benefited himself, and lied to investors about the LFG's independence and 

governance. 

(Title 18, United States Code, Section 371.) 

COUNT TWO 
(Commodities Fraud) 

The Grand Jury further charges: 

91. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set fotth herein. 

92. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, used and employed, and attempted to use and employ, in 

connection with a swap, a contract of sale of a commodity in interstate commerce, and for futw-e 

delivery on and subject to the rules of a registered entity, a manipulative and deceptive device and 

contrivance, in contravention of Title 17, Code of Federal Regulations, Section 180.1, by: (]) using 

and employing, and attempting to use and employ, a manipulative device, scheme, and artifice to 

defraud; (2) making, and attempting to make, an untrne and misleading statement of material fact 

and omitting to state a material fact necessary in order to make the statements made not untrue and 

misleading; and (3) engaging, and attempting to engage in an act, practice, and course of business 

which operated and would operate as a fraud and deceit upon a person, to wit, KWON engaged in 

a scheme to defraud individuals selling digital commodities in exchange for cryptocunencies 

67 



issued by Terraform, including LUNA and UST, by deceiving those individuals about products, 

systems, and entities that operated (or purported to operate) on or in connection with the Terra 

blockchain, including Chai, Min-or, the Genesis Stablecoins, and the LFG. 

(Title 7, United States Code, Sections 9(1) and 13(a)(5), and Title 17, Code of Federal 
Regulations, Section 180.1; Title 18, United States Code, Section 2.) 

COUNT THREE 
(Securities Fraud) 

The Grand Jury further charges: 

93. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set fo1th herein. 

94. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, by use of a means and instrumentality of interstate commerce 

and of the mails, and a facility of a national secw-ities exchange, used and employed, in connection 

with th.e purchase and sale of a security, a manipulative and deceptive device and contrivance, in 

violation of Title 17, Code of Federal Regulations, Section 240.l0b-5, by (a) employing a device, 

scheme, and aitifice to defraud; (b) making an untrue statement of material fact and omitt ing to 

state a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and ( c) engaging in an act, practice, and course of 

business which operated and would operate as a fraud and deceit upon a person, to wit, KWON 

engaged in a scheme to defraud individuals purchasing digital securities issued by Tenafonn , 

including LUNA, by deceiving those individuals about products, systems, and entities that 

68 



operated (or purported to operate) on or in co1mection with the Tena blockchain, including Chai, 

Mirror, the Genesis Stablecoins, and the LFG. 

(Title 15, United States Code, Sections 78j(b) & 78ff; Title 17, Code of Federal Regulations, 
Section 240. l0b-5; Title 18, United States Code, Section 2.) 

COUNT FOUR 
(Wire Fraud) 

The Grand Jury further charges: 

95. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

96. From at least in or about 2018, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, lmowingly having 

devised and intending to devise a scheme and aitifice to defraud, and for obtaining money and 

property by means of false and fraudulent pretenses, representations and promises, transmitted and 

caused to be transmitted by means of wire, radio, and television communication in interstate and 

foreign commerce, writings, signs, signals, pictures, and sounds for the purpose of executing such 

scheme and artifice, to wit, KWON, along with others, engaged in a scheme to defraud purchasers 

of cryptocurrencies issued by Ten-aform, including LUNA and UST, by deceiving those 

individuals about products, systems, and entities that operated (or purported to operate) on or in 

c01mection with the Ten-a blockchain, including Chai, Mirror, the Genesis Stablecoins, and ·the 

LFG, and transmitted electronic communications to the Southern District of New York in 

fu1therance of that scheme. 

(Title 18, United States Code, Sections 1343 and 2.) 

69 



COUNT FIVE 
(Conspiracy to Defraud and Engage In Market Manipulation) 

The Grand Jury further charges: 

97. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if ful ly set forth herein. 

98. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, and others known 

and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and 

with each other to commit offenses against the United States, to wit, (a) commodities fraud, in 

violation of Title 7, United States Code, Sections 9(1) and 13(a)(5) and Title 17, Code of Federal 

Reg1.1lations, Section 180.1; (b) securities fraud, in violation of Title 15, United States Code, 

Sections 78j(b) and 78ff and Title 17, Code of Federal Regulations, Section 240.l Ob-5; (c) wire 

fraud, in violation of Title 18, United States Code, Section 1343; and (d) securities manipulation, 

in violation of Title 15, United States Code, Sections 78i(a)(2) and 78ff, to wit, KWON agreed 

with others to defraud purchasers of cryptocurrencies issued by Terra.form, by deceiving those 

purchasers about the means by which Terra.form sought to maintain UST's $1 peg, and the 

effectiveness of the Terra Protocol, through false statements and market manipulation. 

99. lt was a part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, wil.lfolly and knowingly, directly and indirectly, used 

and employed, and attempted to use and employ, in connection with a swap, a contract of sale of 

a commodity in interstate and foreign commerce, and for future delivery on and subject to the rnles 

of a registered entity, a manipulative and deceptive device and contrivance, in contravention of 

Title 17, Code of Federal Regulations, Section 180.1 , by: (1) using and employing, and attempting 

to use and employ, a manipulative device, scheme, and artifice to defraud; (2) making, and 

70 



attempting to make, untrue and misleading statements of material fact and omitting to state 

material facts necessary in order to make the statements made not untrue or misleading; and (3) 

engaging, and attempting to engage in acts, practices, and courses of business which operated and 

would operate as a fraud and deceit upon other persons, in violation of in violation of Title 7, 

United States Code, Sections 9(1) and 13(a)(5). 

l 00. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indirectly, by 

use of the means and instrumentalities of interstate commerce, and of the mails and of the facilities 

of national securities exchanges, used and employed, in connection with the purchase and sale of 

secUJities, manipulative and deceptive devices and contrivances, in violation of Title 17, Code of 

Federal Reg11lations, Section 240.1 0b-5, by: (a) employing devices, schemes, and artifices to 

defraud; (b) making untrue statements of material fact and omitting to state material facts 

necessary in order to make the statements made, in the light of the circumstances under which they 

were made, not misleading; and ( c) engaging in acts, practices, and courses of business which 

operated and would operate as a fraud and deceit upon persons, in violation of Title 15, United 

States Code, Sections 78j(b) and 78ff. 

101. It was a further part and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, knowingly having devised and intending to devise a 

scheme and artifice to defraud, and for obtaining money and property by means of false and 

fraudulent pretenses, representations, and promises, would and did transmit and cause to be 

transmitted by means of wire, radio, and television communication in interstate and foreign 

commerce, writings, signs, signals, pictm·es, and sounds for the purpose of executing such scheme 

and artifice, in violation of Title 18, United States Code, Section 1343. 

71 



102. It was a further pa1i and object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unknown, willfully and knowingly, directly and indfrectly, by 

the use of the mails and means and instrumentalities of interstate commerce, and of the facilities 

of national securities exchanges, and being a member of national securities exchanges, effected, 

alone and with one and more other persons, a series of transactions in securities registered on 

national securities exchanges, securities not so registered, and in connection with secw·ity-based 

swaps and security-based swap agreements with respect to such securities creating actual and 

apparent active trading in such secw-ities, and raising and depressing the price of such seclU'ities, 

for the purpose of inducing the purchase and sale of such securities by others, in violation of Title 

15, Unjted States Code, Sections 78i(a)(2) and 78ff. 

Overt Acts 

103. In furtherance of the conspiracy and to effect the illegal objects thereof, the 

following overt acts, among others, were committed in the Southern District of New York and 

elsewhere: 

a. In or about May 2021, DO HYEONG KWON, the defendant, and Trading 

Firm Executive-1 communicated by electronic means about altering the market price of UST. 

b. In or about May 2021, the Trading Firm deployed trading strategies 

designed to alter the market price of UST. 

c. On or about May 23, 2021, KWON agreed with the Trading Firm to modify 

an existing loan between Terraform and the Trading Firm to compensate the Trading Finn for its 

assistance in seeking to alter the market price of UST. 

d. On or about May 24, 2021 , KWON caused a Tenaform social media 

account to issue a false and misleading statement concerning the effectiveness and sustainability 

72 



of the Terra Protocol. 

e. On or about October 4, 2021 , KWON made a false and misleading 

statement in an interview transmitted to, among other places, the Southern District of New York, 

that "there's like a number of large market makers that participate in stabilizing the peg of UST" 

but that "[m]ost of them - - I don't think any of them have a contractual relationship with 

[Tenaform]. It's just something that they do because they feel like they can make money out of 

it .... " 

f. On or about March 1, 2022, in the course of an interview on an audio talk 

show, KWON made a false and misleading statement concerning the effectiveness and 

sustainability of the Terra Protocol. 

(Title 18, United States Code, Section 371.) 

COUNT SIX 
(Commodities Fraud) 

The Grand Jury further charges: 

104. The allegations contained in Paragraphs 1 tluough 85 ofthis Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

105. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, used and employed, and attempted to use and employ, in 

connection with a swap, a contract of sale of a commodity in interstate commerce, and for future 

delivery on and subject to the rules of a registered entity, a manipulative and· deceptive device and 

contrivance, in contravention of Title 17, Code of Federal Regulations, Section 180.1, by: (1) using 

and employing, and attempting to use and employ, a manipulative device, scheme, and artifice to 

defraud; (2) making, and attempting to make, an untrue and misleading statement of material fact 

73 



and omitting to state a material fact necessary in order to make the statements made not untrue and 

misleading; and (3) engaging, and attempting to engage in an act, practice, and comse of business 

whjch operated and would operate as a fraud and deceit upon a person, to wit, KWON engaged in 

a scheme to defraud individuals selling digital commodities for cryptocunencies issued by 

Terraform, including LUNA and UST, by using market manipulation and fa lse statements to 

deceive those individuals about the means by which Terraform maintained, and sought to maintain, 

US T's $1 peg, and the effectiveness of the Terra Protocol. 

(Title 7, United States Code, Sections 9(1) and 13(a)(5), and Title 17, Code of Federal 
Regulations, Section 180.l; Title 18, United States Code, Section 2.) 

COUNT SEVEN 
(Securities Fraud) 

The Grand Jury further charges: 

106. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

107. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York, and elsewhere, DO HYEONG KWON, the defendant, willfully and 

knowingly, directly and indirectly, by use of a means and instrumentality of interstate commerce 

and of the mails, and a facility of a national securities exchange, used and employed, in com1ectio11 

with the purchase and sale of a security, a manipulative and deceptive device and contrivance, in 

violation of Title 17, Code of Federal Regulations, Section 240.l0b-5, by (a) employing a device, 

scheme, and artifice to defraud; (b) making an untrue statement of material fact and omitting to 

state a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and ( c) engaging in an act, practice, and course of 

business which operated and would operate as a fraud and deceit upon a person, to wit, KWON 

74 



engaged in a scheme to defraud individuals purchasing digital securities issued by Tel1'aform, 

including LUNA, by using market manipulation and false statements to deceive those individuals 

about the means by which Terrafonn maintained, and sought to maintain, UST's $1 peg, and the 

effectiveness of the Terra Protocol. 

(Title 15, United States Code, Sections 78j(b) & 78ff; Title 17, Code of Federal Regulations, 
Section 240.l0b-5; Title 18, United States Code, Section 2.) 

COUNT EIGHT 
(Wire Fraud) 

The Grand Jury further charges: 

108. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set fo11h herein. 

109. From at least in or about 2021, up to and including in or about 2022, in the Southern 

District of New York and elsewhere, DO HYEONG KWON, the defendant, knowingly having 

devised and intending to devise a scheme and artifice to defraud, and for obtaining money and 

property by means of false and fraudulent pretenses, representations and promises, transmitted and 

caused to be transmitted by means of wire, radio, and television communication in interstate and 

foreign commerce, writings, signs, signals, pictures, and sounds for the purpose of executing such 

scheme and aiiifice, to wit, KWON, along with others, engaged in a scheme to defraud purchasers 

of cryptocurrencies issued by Terraform, including LUNA and UST, by deceiving those 

individuals about the means by which Terraform maintained, and sought to maintain, UST's $1 

peg, and the effectiveness of the Terra Protocol, and transmitted electronic communications to the 

Southern District of New York in furtherance of that scheme. 

(Title 18, United States Code, Sections 1343 and 2.) 

75 



COUNT NINE 
(Money Laundering Conspiracy) 

The GTand Jury further charges: 

I 10. The allegations contained in Paragraphs 1 through 85 of this Indictment are hereby 

repeated, re-alleged, and incorporated by reference as if fully set forth herein. 

111. From at least in or about 2022, up to and including in or about April 2024, in the 

Southern District of New York and elsewhere, DO HYEONG KWON, the defendant, and others 

known and unknown, willfully and knowingly combined, conspired, confederated, and agreed 

together and with each other to commit money laundering, in violation Title 18, United States 

Code, Sections 1956(a)(l )(B)(i) and l 957(a). 

112. It was a pa.it and an object of the conspiracy that DO HYEONG KWON, the 

defendant, and others known and unlrnown, knowing that the property involved in certain financial 

transactions represented the proceeds of some form of unlawful activity, would and did conduct 

and attempt to conduct such financial transactions, which transactions affected interstate and 

foreign commerce and involved the use of a financial institution which was engaged in, and the 

activities of which affected, interstate and foreign commerce, and which in fact involved the 

proceeds of specified unlawful activity, to wit, wire fraud, in violation of Title 18, United States 

Code, Section 1343, and securities fraud, in violation of Title 15, United States Code, Sections 

78j(b) and 78ff and Title 17, Code of Federal Regulations, Section 240. l0b-5, knowing that the 

transactions were designed in whole and in part to conceal and disguise the nature, location, source, 

ownership and control of the proceeds of specified unlawful activity, in violation of Title 18, 

United States Code, Section I 956(a)(l )(B)(i). 

113. It was a further part and an object of the conspiracy that DO HYEONG KWON, 

the defendant, and others known and unknown, within the United States, knowingly engaged and 

76 



attempted to engage in monetary transactions, as defined in Title 18, United States Code, Section 

l 957(f)(l ), in criminally derived property of a value greater than $10,000 that was derived from 

specified unlawful activity, to wit, KWON and others, lmown and unknown sent wires and 

cryptocmrency transfers worth over $10,000 consisting of proceeds from wire fraud and securities 

fraud, in violation of Title 18, United States Code, Section l 957(a). 

(Title 18, United States Code, Sections 1956(h).) 

FORFEITURE ALLEGATIONS 

114. As a result of committing the offenses alleged in Counts One, Three, Four, Five, 

Seven, and Eight of this Indictment, DO HYEONG KWON, the defendant, shall forfeit to the 

United States, pursuant to Title l 8, United States Code, Section 981(a)(l)(C) and Title 28 United 

States Code, Section 2461 ( c ), any and all property, real and personal, that constitutes or is derived 

from proceeds traceable to the commission of said offenses, including but not limited to a sum of 

money in United States cut1'ency representing the amount of proceeds traceable to the commission 

of said offenses and the following specific property: 

a. The entity Terraform Labs PTE, Ltd.; 

b. Any and all assets, funds, and property of Terraform Labs PTE, Ltd.; 

c. The entity the Luna Foundation Guard Ltd. ; 

d. Any and all assets, funds, and property of the Luna Foundation Guard Ltd. ; 

e. Any and all accounts held in the name of Tenafonn Labs PTE, Ltd. at 

Sygnum Bank AG, including but not limited to accounts with account numbers ending in -3674 

and -1793; 

f. Any and all accounts held in the name of Terraform Labs PTE, Ltd. at 

CIMB Bank, including but not limited to an account with account number ending in - 5203; 

77 



g. Any and all accounts held in the name of Terraform Labs PTE, Ltd. at DBS 

Bank; 

h. Any and all assets, funds, and property held at the cryptocurrency exchange 

KuCoin under user number ending in -5668; 

i. Any and all assets, funds, and property held at the cryptocurrency exchange 

OKX under user number ending in -9526; 

J. Any and all assets, funds, and property held at the cryptocurrency exchange 

Kraken under user number ending in -SCDI; 

k. Any and all assets, funds, and property held at the eryptocw-rency exchange 

Binance under user numbers ending in -1760, -2128, and -9329; and 

l. Cryptocurrency wallets with the following wallet addresses (and all assets, 

funds, and propetty contained within those wallets): 

Address 1: an address ending in -qexu 

Address 2: an address ending in -tv4q 

Address 3: an address ending in -06dz 

A list of this specific property that includes full account and user numbers is attached hereto as 

Attachment 1. 

115. As a result of committing the offense alleged in Count Nine of this Superseding 

Indictment, DO HYEONG KWON, the defendant, shall forfeit to the United States, pursuant to 

Title 18, United States Code, Section 982(a)(l ), any and all prope1ty, real and personal, involved 

in said offense, or any property traceable to such property, including but not limited to a sum of 

money in United States currency representing the amount of property involved in said offense and 

the specific property set forth above in paragraphs l 16(a)-(l). 

78 



116. If any of the above-described forfeitable prope1ty, as a result of any act or omission 

of the defendant: (a) cannot be located upon the exercise of due diligence; (b) has been transfened 

or sold to, or deposited with, a third person; ( c) has been placed beyond the jurisdiction of the 

Court; (d) has been substantially diminished in value; or (e) has been commingled with other 

property which cannot be subdivided without difficulty;. it is the intent of the United States, 

pursuant to Title 21, United States Code, Section 853(p) and Title 28, United States Code, Section 

2461(c), to seek forfeiture of any other property of the defendant up to the value of the above 

forfeitable property. 

(Title 18, United States Code, Section 981; 
Title 18, United States Code, Section 982; 

Title 21, United States Code, Section 853; and 
Title 28, United States Code, Section 2461.) 

79 

DAMIAN WILLIAMS 
United States Attorney