Jailed Crypto Tycoon’s Company Appoints CEO

Terraform Labs has named a new chief executive officer to run the crypto company while its co-founder Do Kwon faces fraud charges stemming from the $40 billion collapse of the TerraUSD and Luna cryptocurrencies.

The interim CEO is Chris Amani, who was previously the company’s chief operating officer and chief financial officer, Terraform Labs told The Wall Street Journal. 

Terraform Labs is trying to show that it is business as usual while the company’s former CEO is jailed in the Balkan country of Montenegro. Both the U.S. and Kwon’s native South Korea are seeking his extradition. 

The company is pressing on with a long-shot bid to revive the Terra blockchain that underpinned the failed cryptocurrencies. Amani said the company would develop applications “that provide real utility” and would share more details of 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 in an interview.

Amani said the company had about 40 employees, including about 15 who were with Terraform Labs before the May 2022 crash of TerraUSD and Luna. 

Kwon resigned as CEO of Singapore-based Terraform Labs on March 31, about a week after his arrest, the company said in a statement. He stepped down as a director of the company on May 27 to focus on “personal legal affairs,” Terraform Labs said.

“We wish Do the best and we hope that he’s able to clear himself of all charges. 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,” Amani said.

Kwon remains the majority shareholder of Terraform Labs, Amani confirmed. The Securities and Exchange Commission has said in court filings that Kwon owns 92% of the company’s shares.

Kwon continued running Terraform Labs remotely after he vanished from public view during the half-year before his arrest, Amani said. Officials say Kwon was lying low in Serbia before crossing into neighboring Montenegro in mid-March.

The SEC filed a civil fraud lawsuit against Terraform Labs and Kwon in February, accusing them of misleading investors in TerraUSD and Luna. The company’s lawyers have sought to dismiss the lawsuit, arguing that the agency exceeded its authority. Kwon, who has denied committing fraud, has been charged in a related criminal case brought by U.S. prosecutors.

An American, Amani is based in the U.S. He was CEO of the business-software startup Humanity before joining Terraform Labs as COO in December 2021. He later added the CFO title.

Following the experience of the TerraUSD crash, Amani said Terraform Labs wouldn’t seek to launch a new stablecoin.

TerraUSD was a so-called algorithmic stablecoin that used financial engineering to maintain a price of $1, without holding actual dollars in the bank to underpin its value. 

Kwon touted TerraUSD as the future of money, and investors flocked into it, largely drawn by the promise of nearly 20% yields for people who parked their money in the stablecoin. During a few days in May 2022, TerraUSD fell below its $1 peg while its sister cryptocurrency, Luna, plunged more than 99%. The crash wiped out the savings of thousands of investors worldwide.

Federal prosecutors in New York have charged Mr. Kwon with eight criminal counts of fraud stemming from the collapse. Mr. Kwon’s lawyers haven’t formally responded to the criminal charges and would be unlikely to do so unless he is extradited to the U.S. 

Meanwhile, South Korea has charged Kwon with violating its capital-markets law. Terraform Labs has called the South Korean accusations unfair and “highly politicized.”

Write to Alexander Osipovich at [email protected]