Terraform Labs co-founder Do Kwon was recently released from prison in Montenegro as the Supreme Court deliberates on extradition requests from the U.S. and South Korea. Kwon was arrested in March 2023 for using a fake Costa Rican passport while traveling to Dubai. The Supreme State Prosecutor’s Office in Montenegro is challenging Kwon’s extradition to South Korea, claiming errors were made in the ruling. Both the U.S. and South Korea have appealed for extradition, but Montenegro’s minister of justice has given preference to South Korea. Kwon’s release from prison occurred as his regular prison term for using fake papers ended, and he was taken for further interviewing by the police directorate for foreigners.
Do Kwon is responsible for the failed crypto project TerraUSD stablecoin, which was launched in 2022. The stablecoin, pegged algorithmically to the U.S. dollar, lost its pegging and resulted in its collapse, along with the Terra sister token, LUNA. Kwon escaped to Singapore to avoid prosecution by South Korean authorities for fraud charges before being apprehended in Montenegro. He was sentenced to four months in prison for attempting to escape using a forged Costa Rican passport. South Korean authorities are now pursuing Kwon for alleged fraud cases and tax evasion, escalating efforts to ensure he faces prosecution. Kwon has denied the charges, attributing the $40 billion collapse of the Terra ecosystem to market forces and denying any criminal involvement.
The decision to extradite Do Kwon to South Korea is currently being challenged by Montenegro’s top prosecutor, with the case being escalated to the Supreme Court for review. Kwon’s extradition is being pursued by both South Korea and the U.S., but Montenegro’s preference for South Korea is being contested. Kwon’s release from prison occurred as his regular prison term expired, and he was taken for further questioning by the police directorate for foreigners. The Supreme State Prosecutor’s Office in Montenegro alleges errors in the extradition ruling and is seeking a review by the Supreme Court. Kwon’s arrest stemmed from using a fake passport while traveling to Dubai, leading to his imprisonment in Montenegro and subsequent legal battles regarding extradition.
The collapse of the TerraUSD stablecoin and Terra ecosystem was a significant event attributed to Do Kwon, who designed the stablecoin as a utility token on the blockchain, pegged 1:1 to the U.S. dollar algorithmically. The loss of pegging led to the collapse of TerraUSD and the associated token, LUNA, prompting legal action against Kwon. His escape to Singapore to avoid prosecution by South Korean authorities resulted in his arrest in Montenegro, sentencing to prison, and extradition proceedings. Kwon maintains his innocence, claiming the collapse was due to market forces and not criminal activity. The ongoing legal battle over his extradition involves multiple countries and legal challenges as authorities seek to hold Kwon accountable for alleged fraud and tax evasion.
