Do Kwon, the South Korean co-founder of Terraform Labs, was extradited from Montenegro to the US, ending months of legal proceedings over the matter, according to local media reports.
Montenegrin police transferred Kwon to US authorities at Podgorica International Airport on Dec. 31. He is set to face charges stemming from the 2022 collapse of the TerraLUNA ecosystem, which wiped roughly $40 billion from the market.
Kwon was arrested in March 2023 in Montenegro for attempting to travel with a fake passport. Since then, he fought extradition to the US and instead sought repatriation to South Korea.
However, Montenegro’s judiciary repeatedly denied his appeals, and Justice Minister Bojan Bozovic signed the extradition order to the US last week.
TerraLUNA collapse
TerraUSD, marketed as a stablecoin designed to maintain parity with the US dollar, de-pegged sharply, wiping out over $40 billion in market value and leaving thousands of investors with massive losses. The crash sent shockwaves through the broader crypto market, prompting regulatory scrutiny and allegations of fraud.
Kwon co-founded Terraform Labs in 2018, promoting TerraUSD as a revolutionary decentralized financial tool. However, critics warned that the algorithmic model underpinning TerraUSD’s stability was unsustainable.
When the stablecoin’s value plummeted, the accompanying collapse of Luna exacerbated the losses, with the total market value of the two tokens declining by an estimated $33.9 billion.
Following the crash, South Korean authorities issued a warrant for Kwon’s arrest on charges including fraud and tax evasion. Investors also filed lawsuits alleging that Kwon and his company operated a Ponzi scheme, misleading them about the viability of TerraUSD and Luna.
Kwon’s arrest
Interpol issued a red notice for Kwon in September 2022, marking him as a high-priority international fugitive. Despite this, Kwon remained elusive for months, allegedly traveling between several countries before being apprehended in Montenegro.
During his arrest, police discovered that Kwon was using falsified Costa Rican and Belgian passports, adding charges of document forgery to his legal troubles.
While South Korea has sought Kwon’s extradition to face charges domestically, Montenegrin authorities prioritized extraditing him to the United States. In the US, Kwon is expected to face trial for securities fraud, wire fraud, and conspiracy related to the implosion of Terraform Labs’ cryptocurrencies.
Kwon’s case has become emblematic of the risks and regulatory challenges within the crypto industry. The TerraUSD collapse prompted global calls for tighter oversight of digital assets, with regulators warning against the systemic risks posed by poorly managed stablecoins.
The extradition signals a new chapter in the international pursuit of accountability within the crypto sector, as Kwon’s trial in the US is expected to scrutinize his role in one of the largest financial collapses in crypto history.
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