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(Kitco News) -
Do Kwon is no longer the Chief Executive Officer of Terraform Labs, the Wall Street Journal reported on Wednesday. The company has named Chris Amani as the new interim CEO to replace him.
“We wish Do the best and we hope that he’s able to clear himself of all charges,” Amani said. “But while he’s incarcerated and while he’s facing his own legal challenges, it just makes sense for us to continue on without him.”
Terraform said that Kwon resigned as CEO on March 31, eight days after he and Terraform Labs’ chief financial officer Han Chang Joon Kwon were arrested at the airport in Montenegro's capital city of Podgorica after being caught attempting to travel to Dubai under fake Costa Rican traveling documents. On May 27, Kwon stepped down as a company director to focus on “personal legal affairs,” Terraform Labs said.
Amani is an American and is based in the United States. He previously ran business-software startup Humanity before becoming the COO of Terraform in December 2021, adding the CFO title later.
Terraform Labs is based in Singapore and was cofounded by Kwon and fellow South Korea national Hyun-Seong Shin, also known as Daniel Shin, who had his first hearing in a South Korean court on Jul. 10 on charges related to the collapse of the Terra-Luna ecosystem. Amani said the company has approximately 40 employees today, including around 15 who worked there prior to the May 2022 collapse of the Terra/Luna algorithmic stablecoin project.
Amani said that Kwon continued to run Terraform Labs remotely in the six months that he was on the run from authorities. South Korean officials said Kwon had been hiding out in Serbia before he crossed the border into Montenegro sometime in mid-March.
Kwon is by no means out of the picture at Terraform Labs, however. The Securities and Exchange Commission stated in their court filings that Kwon owns 92% of Terraform’s shares, and Amani confirmed to WSJ that Kwon remains the majority shareholder of the company.
Amani said following the implosion of the Luna/Terra crash Terraform Labs isn’t looking to launch a new stablecoin. Instead, the company is hoping to revive the Terra blockchain and develop applications “that provide real utility” to users. Amani said Terraform would share additional details about its plans in the coming months.
“We have a vision for how we could salvage this, even though I think it’s going to be hard and it’s going to take a long time,” Amani said.
Both the United States and South Korea are seeking Kwon’s extradition, and the countries have also requested Kwon’s laptops and other devices on suspicion that they might contain evidence of crimes and cryptocurrency.
On June 7, the lead prosecutor of South Korea’s investigation into the collapse of Terraform Labs said Kwon could serve decades-long consecutive prison sentences in both his native country and the United States.
Sunghan Dan, director of the FCIB at the Seoul Southern District Prosecution Service, told Bloomberg that Kwon could conceivably be tried and sentenced in South Korea, then “be extradited to the US and face trial there, and then have the sentence executed in South Korea and the US after that.”
Dan said that he expects Kwon to get a record-setting financial fraud sentence in excess of 40 years, and he believes that the former executive should be extradited to his country first. “This is the largest financial fraud or financial securities fraud case that has ever happened in South Korea,” he said.
On Feb. 17, the U.S. Securities and Exchange Commission (SEC) charged Do Kwon with securities fraud, writing that Kwon and Terraform orchestrated “a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
The SEC said Terraform and Kwon “touted and marketed Terra USD (UST) as a ‘yield-bearing’ stablecoin, which they advertised as paying as much as 20 percent interest through the Anchor Protocol,” and that they “repeatedly misled and deceived investors that a popular Korean mobile payment application used the Terra blockchain to settle transactions that would accrue value to LUNA.”
The complaint also alleges that Kwon and others at Terraform “misled investors about UST’s stability before it ultimately depegged from the U.S. dollar and became nearly worthless.
