- Former CEO of Terraform Labs Do Kwon was extradited to the US on December 31.
- Kwon faces securities fraud charges in the US for misleading investors about TerraUSD’s stability and is also wanted in South Korea for separate legal proceedings.
Montenegro has extradited Do Kwon, the former CEO of Terraform Labs, to the United States and handed over to FBI agents at Podgorica Airport on December 31. He’s now facing charges related to the collapse of the TerraUSD and Luna cryptocurrencies.
Do Kwon a Wanted Man in US and South Korea
Kwon, a South Korean national, is accused of conspiracy to commit fraud concerning the May 2022 collapse of Terraform Labs’ cryptocurrencies, causing an estimated US$40B (AU$64.6B) in investor losses and disrupting the entire cryptocurrency market, bringing a heightened level of scrutiny and pressure from regulatory bodies.
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Authorities allege that Do Kwon misled US investors about the stability of TerraUSD, resulting in securities fraud charges. But he’s also wanted in South Korea, as the government sought Kwon’s extradition, where he faces separate legal proceedings for his role in the collapse.
Interestingly, Montenegro does not have formal extradition treaties with either the US or South Korea, but the justice ministry determined that the US’s request met the legal criteria, according to a Bloomberg report. This followed a ruling by Montenegro’s Constitutional Court rejecting Kwon’s appeal against the extradition.
TerraUSD and Luna Crash Triggered Severe Crisis
Kwon was arrested in March 2023 at Podgorica Airport while attempting to travel to Dubai using a falsified Costa Rican passport. His arrest ended months of evasion that included stops in South Korea and Singapore.
Terraform Labs was once a prominent name in the crypto sector. Its tokens, TerraUSD and Luna, gained significant popularity in 2021 and early 2022. Kwon, who garnered a devoted following and support from notable investors, earned the nickname “King of Cryptocurrency”.
However, the collapse of TerraUSD and Luna in May 2022 marked one of the most severe financial crises in the crypto industry. The tokens lost over 99% of their value within two days, eroding investor confidence and prompting increased regulatory scrutiny.
Related: Judge Approves Terraform Labs Bankruptcy Plan for Wind-down Following SEC Settlement
In February 2023, the US Securities and Exchange Commission (SEC) filed a lawsuit against Kwon and Terraform Labs, alleging market manipulation, leading to a US$4.5B (AU$7.2B) settlement and Kwon denying any wrongdoing.
