Montenegro is set to decide on the extradition of Do Kwon, co-founder of Terraform Labs this week, as confirmed by Montenegro’s Justice Minister Bojan Božović in an Oct. 17 statement. The upcoming decision follows months of controversy and delays in legal proceedings.
Following the 2022 collapse of TerraUSD, or UST, Kwon faced multiple criminal charges in South Korea, the U.S., and Singapore for financial fraud and securities violations.
The U.S. authorities accused him of orchestrating a multi-billion-dollar securities fraud scheme. Interpol issued a red warrant for Do Kwon, making him a wanted person worldwide, due to his involvement in the collapse of the Terra Luna and Terra cryptocurrencies.
Founder On The Run!
Kwon was arrested in Montenegro in March 2023 while attempting to travel using forged documents. Both South Korea and the U.S. actively sought Do Kwon’s extradition after his arrest.
The Supreme Court initially decided to have Kwon extradited to the U.S., where the Terraform Labs co-founder would face a series of serious charges for the part he played in the collapse of his empire. Kwon, however, appealed against the decision. The Court later rejected Kwon’s appeal.
However, following a series of appeals and extradition requests, in August this year, a Montenegrin appellate court confirmed a lower court’s decision to extradite Kwon to South Korea, rejecting the U.S. request.
South Korean authorities have intensified their investigation into Terraform Labs. Since the crash, investigators have been collecting evidence, interviewing former project staff, and focusing on potential tax evasion charges.
Slow Legal System
Božović has stated that the decision on whether to extradite Do Kwon has already been made and will be announced by the end of the week. Kwon’s extradition could lead to a severe legal battle in South Korea.
Public sentiment regarding Kwon’s extradition is divided. Some argue that he should face justice in the U.S., where penalties for fraud could be more severe.
In the aftermath of the collapse, Kwon said he was responsible for the failure of the Terra ecosystem. He also took steps to hire legal representation in South Korea to prepare for potential legal proceedings.
In June this year, Terraform Labs agreed to pay a settlement of $4.47 billion to the U.S. SEC to resolve allegations of fraud related to the collapse of its algorithmic stablecoin, TerraUSD (UST), and its associated cryptocurrency, LUNA.
Following the settlement announcement, Terraform Labs declared its intention to dissolve its operations. CEO Chris Amani confirmed that the company would wind down completely and transfer control of the Terra blockchain to the community.
Montenegrin Prison System Under Scrutiny
Amid the extradition proceedings, Kwon allegedly had access to laptops, mobile phones, and other electronic devices, including those used to access cryptocurrency wallets when in a Montenegrin prison.
As reported by Portal ETV, a mobile phone confiscated from Kwon at the time of his arrest was found to have been activated after a tunnel was discovered in the High Court building.
Kwon allegedly managed to execute at least three cryptocurrency transactions in two months after his arrest on March 23, 2023. Authorities were said to have taken 72 days to seize his electronic devices and crypto wallet information, which allowed him to make these transactions during that stretch.
The findings raise questions about whether Do Kwon was able to maintain communication and conduct transactions while in detention. These also put the authorities’ handling of the case in question.
The Montenegrin authorities have been accused of not conducting a thorough investigation into Kwon’s activities while in the country, including his connections to local politicians and businessmen. The report suggests that there may have been political interference in the investigation, with allegations of a cover-up to protect certain individuals.
As of October 2024, Kwon has been released from prison after completing a four-month sentence for forgery.
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