US or South Korea: Terraform Labs Co-Founder Do Kwon Extradition Fate to Be Decided by Judge

Montenegro’s Justice Minister, Marko Kovac, has announced that the fate of Do Kwon now rests in the hands of a judge who will determine whether he will be extradited to the United States or South Korea.

“Consideration will be given to the gravity of crimes, location of committed offenses, sequence of requests, as well as citizenship” of the suspects, Kovac told reporters in the capital Podgorica Wednesday, according to a Bloomberg report. 

Kovac added that if the suspects, which include Kwon and Terraform’s chief financial officer, Han Chang-joon, are convicted in Montenegro, they’ll first have to serve time there. 

In a press conference, Montenegro authorities confirmed that both the US and South Korea have requested the extradition of Kwon. They noted that Singapore has not yet officially submitted a request for extradition. 

Montenegro’s Minister of the Interior, Filip Adzic, announced via Twitter last week that an individual suspected of being Do Kwon has been arrested at Podgorica airport. 

Subsequently, South Korean police said that the identity of the suspect arrested in Montenegro had been confirmed as Kwon after his fingerprints matched the information held by the country’s National Police Agency (KNPA).

Do Kwon is the co-founder and CEO of Singapore-based Terraform Labs, the company behind the crashed stablecoin TerraUSD and cryptocurrency Luna.

TerraUSD used a mix of algorithms and trader incentives involving a sister token, Luna, to maintain its $1 peg. However, the stablecoin lost its dollar peg in May last year after a wave of sell-offs hit the crypto market. 

US prosecutor estimate that the crash of the Terra ecosystem drained at least $40 billion from investors.

US, South Korea, and Montenegro Press Charges Against Do Kwon

Following his arrest, Do Kwon was charged with eight counts of fraud in New York, which include two counts each of securities fraud, wire fraud, commodities fraud, and conspiracy. 

US prosecutors detailed that Kwon made a series of false and misleading statements during a TV interview about the extent to which the Terra blockchain had been adopted by users.

The disgraced crypto boss also made a series of purportedly misleading statements about the effectiveness of the TerraClassicUSD stablecoin to keep its peg with the US dollar, as well as Kwon’s alleged involvement in trading strategies that were designed to alter the market price of assets.

The latest indictment came as the Securities and Exchange Commission has also charged Terraform Labs and Kwon with defrauding US investors in mid-February. 

At the time, the agency accused Terraform Labs and Kwon of orchestrating a multibillion-dollar cryptocurrency fraud. The SEC has also claimed that Terraform and Kwon misled investors about the stability of UST while it was using a flawed model all along.

Likewise, in mid-September, a Seoul court issued an arrest warrant for Kwon, following a criminal probe into the collapse of the Terra ecosystem. South Korea has also charged Kwon with violating the Capital Markets Act and committing fraud. 

Meanwhile, prosecutors in Montenegro have said they will bring charges against Kwon and his aide for falsifying official documents, which could result in a maximum of six-month time in jail.