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- 1 US and South Korean governments charged Kwon, founder and CEO of Terraform Labs, with various fraud charges.
- 2 The final decision on which country out of the USA and South Korea will take Kwon depends on Montenegro’s Minister of Justice.
The Higher Court in Podgorica, the capital city of Montenegro, has approved the extradition of Do Kwon, co-founder of Terraform Labs, as per the requests made by South Korea and the United States.
They have recently released this update on the judiciary’s official website.
Kwon Do-Hyung, known as Do Kwon, is the co-founder and CEO of Terraform Labs, a Singapore-based blockchain development company. He is widely known for the creation of the Terra crypto ecosystem project, which collapsed in May 2022.
Highlights of the Event: The Terra Collapse
In September 2020, Terraform Labs launched the TerraUSD (UST) algorithmic stablecoin, which was pegged to the US dollar. Luna Token backed the stablecoin UST, which theoretically helped maintain the stablecoin’s dollar value.
However, both of these cryptocurrencies collapsed in May 2022 when UST was de-pegged from the dollar after a series of outsized sell-offs by investors.
This led to a fall in the price of both coins by over 99% and a decrease in investor confidence. Resulting in the removal of approximately $40 million in direct investments.
Do Kwon Got Arrested, and SEC filed Charges Against Him
In February 2023, the U.S. Securities and Exchange Commission (SEC) charged Do Kwon and Terraform Labs with securities fraud for creating a fraudulent scheme that caused investors to lose billions of dollars.
In March 2023, Kwon was arrested in Montenegro with his associate Han Chang-Joon, the former CFO at Terraform Labs. Both of them got arrested as they were trying to board an international flight with forged documents.
Along with this, police said that after arresting them, they found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers, and other devices in their luggage. All these belongings confirm a part of the charges that were filed against them.
Following Kwon’s arrest, the U.S. District Court for the Southern District of New York announced an eight-count indictment against Kwon, including commodities fraud, securities fraud, conspiracy, and wire fraud.
All these charges collectively contribute to multibillion-dollar fraud.
Firstly, the Montenegrin court punished them for using forged identities and announced a 30-day trial imprisonment for both of them.
Subsequently, a four-month prison sentence was announced for them, from which they got bail in June 2023 with a fine of $440,320 and got house arrest for the period of imprisonment.
Recent Developments in the Case
A court in Podgorica, the capital of Montenegro, has approved the extradition of Do Kwon to either South Korea or the United States, as per the update posted on the judiciary’s website.
The update mentions that the Montenegrin Justice Minister will make a final decision on the repatriation after Kwon serves a four-month prison sentence in Montenegro for prior charges.
Earlier in November 2023, the Montenegro High Court upheld the four-month prison sentences of Kwon and Hang Chang Joon for document falsification. Despite their appeal and denial of the charges, the High Court said that the sentence was appropriate.
With South Korea and the United States also seeking to prosecute him, it will be entirely up to the Minister of the Court of Montenegro to determine which country Do Kwon will be detained in after the completion of the period of imprisonment in the country.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
