New York federal prosecutors have brought criminal charges against Do Kwon, the Co-Founder and CEO of collapsed crypto firm Terraform Labs, only a few hours after his arrest by Montenegro police.

Do Kwon Faces Criminal Charges in the US

According to the filings at the federal court of the Southern New York district, the prosecutors brought eight counts of charges against Kwon for his involvement in the failed stablecoin project. He is charged with commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation.

Kwon, along with another unknown person, was arrested on Thursday while he was preparing to board a flight in Montenegro. He used forged Costa Rican travel documents at a passport check for a flight to Dubai, Montenegro's Interior Ministry confirmed.

The charges by the New York did not come abruptly. Earlier media reports confirmed that the Federal Bureau of Investigation (FBI) and the prosecutors from the Southern District of New York were investigating the TerraUSD collapse and interviewing the former employees of Terraform Labs.

Though officially not announced, a Department of Justice spokesperson confirmed to the media that the United States would seek Kwon's extradition.

An International Fugitive

Kwon is a wanted person in South Korea as the authorities issued an arrest warrant against him last September for violating local capital market laws. Interpol also issued a 'red notice' for his arrest at the request of the South Korean authorities.

Until the arrest, Kwon's whereabouts were unknown as he disappeared from public view last year. He was suspected of leaving Singapore last September and reaching Serbia with a stopover in Dubai. Meanwhile, he appeared in an interview with crypto journalist, Laura Shin last October and denied that he was on the run. However, he didn't disclose his location at the time, citing safety.

Another Crypto Fraud?

Terraform Labs, the Singapore-based company run by Kwon, issued an algorithmic stablecoin, pegged to 1-to-1 with USD, that collapsed last year in May, bringing havoc to the broader cryptocurrency market. The exposure to the once-high-flying company forced many other crypto companies towards bankruptcy.

Last month, the US securities regulator bought civil charges against Kwon, alleging him of orchestrating and running a "multi-billion dollar crypto asset securities fraud." Additionally, the Securities and Exchange Commission (SEC) alleged that the crypto asset offered by Terraform Labs were unregistered securities.

Moreover, the regulator then blamed Kwon for misleading and deceiving investors with the stability of UST, claiming it to be a "yield-bearing" stablecoin that would return up to 20 percent interest through the Anchor Protocol.

"Kwon agreed with others to defraud purchasers of cryptocurrencies issued by TFL, by deceiving those purchasers about the effectiveness of the algorithmic mechanism that purportedly ensured the stability of UST's price through false statements and market manipulation," the latest US court filing stated.