Terra’s Do Kwon Should Be Extradited to US, Montenegro Court Rules

The legal tussle over which country will put Do Kwon, the disgraced founder of collapsed crypto company Terraform Labs on trial, has reached a decision.

According to the Wall Street Journal on Wednesday, the High Court in Montenegro has ruled that Do Kwon (also known as Kwon Do-hyeong) should be extradited to the US to stand trial on fraud charges, rather than to his native country of South Korea.

It comes after a US federal judge had ruled in December that Do Kwon and Terraform Labs had violated US law by failing to register two digital currencies that collapsed in 2022. He also delayed the US trial to 25 March to allow time for Kwon to be extradited.

Extradition case

The WSJ reported a court spokesperson as saying on Wednesday that lawyers for Do Kwon have three days to appeal the ruling by the High Court in the Montenegrin capital of Podgorica.

If an appeal is filed, the appeals court in the tiny Balkans country will reportedly have the final say in the legal case.

The case against Do Kwon and Terralabs has been ongoing for a while now, after Do Kwon had moved from South Korea to Singapore with his family following the collapse of his $40 billion digital asset project – which included the stablecoin Terra and its sister token Luna.

Terraform had issued the TerraUSD “stablecoin”, intended to maintain a 1:1 peg with the US dollar.

It is thought that nearly 250,000 people had invested in Terraform Labs’ coins, and blockchain analytics firm Elliptic estimated that investors in TerraUSD and Luna lost an estimated $42 billion.

The reclusive Kwon had previously insisted neither he nor his company made money on the crash, but he did not exactly help his cause.

He is known for his caustic remarks about detractors, and told a YouTube crypto channel a week before the demise of TerraUSD, “95 percent [of coins] are going to die – but there’s also entertainment in watching companies die too.”

Just before the implosion he told followers on Twitter, “I love chaos.”

But on 13 May 2022 he tweeted, “I am heartbroken about the pain my invention has brought on all of you.”

Arrest warrant

When South Korea issued an international arrest warrant, and Interpol also issued a “red notice” for his arrest, Do Kwon was nowhere to be found.

Do Kwon had denied that he was on the run, but he did not reveal his whereabouts after police in Singapore could not locate him.

Then in February 2023 the US Securities and Exchange Commission (SEC) charged Singapore-based Terraform Labs PTE Ltd and Do Kwon with orchestrating a multi-billion dollar crypto asset securities fraud.

Shortly after that in March 2023 Do Kwon was arrested in Podgorica, the capital city of the Balkan country of Montenegro.

Kwon and a second person identified as Han Chang-joon, Terraform Labs’ former finance officer, had been arrested when they tried to board a flight to Dubai.

Montenegrin police had charged the two suspects with forging official documents after police found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers and other devices in their luggage.

Both South Korea and the US sought his extradition to their respective jurisdictions.

Last year Do Kwon had been sentenced to four months in prison in Montenegro for using fake travel documents, and after that sentence was served, a court decided he should be extradited, and now it looks as though he will be traveling to the United States, and not South Korea.