Do Kwon, the disgraced founder of collapsed crypto company Terraform Labs, extradited to the US after protracted battle
Crypto fugitive Do Kwon has finally been extradited to the United States, after a protracted legal battle.
Reuters reported the Montenegro’s interior ministry as saying in a statement that Kwon had been handed over to US law enforcement officers and agents of the FBI at Podgorica airport.
Do Kwon is the disgraced founder of collapsed crypto company Terraform Labs, and he faces criminal charges of having deceived investors about the stability of the TerraUSD cryptocurrency and how an app used the Terraform blockchain.
SEC case
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 – a far bigger number than the recent trial of FTX’s Sam Bankman-Fried.
In February 2023 the SEC charged Singapore-based Terraform Labs PTE Ltd and Do Kwon with orchestrating a multi-billion dollar crypto asset securities fraud that lead to the 2022 collapse of the $40 billion digital asset project – which included the stablecoin Terra and its sister token Luna.
In December 2023 a US federal judge ruled that Do Kwon and Terraform Labs had violated US law by failing to register the two digital currencies that had collapsed in 2022.
A civil fraud trail against Do Kwon and Terraform Labs began in New York on 26 March 2024, and concluded in April 2024, when both were found liable on civil fraud charges.
The civil trial saw a Manhattan jury conclude that both had misled investors about the stability of their so-called “algorithmic” native stablecoin, Terra USD (UST), and the use cases for the Terra blockchain.
They concluded that “Do Kwon and Terra orchestrated one of the largest securities frauds in US history by, among other things, falsely claiming that they had achieved the Holy Grail of crypto: a non-illicit use case.”
In April 2024 the SEC had asked US District Judge Jed Rakoff in Manhattan to impose $5.3 billion in fines on Terraform Labs and Do Kwon.
In June 2024 Terraform Labs and Do Kwon agreed to pay more than $4.5 billion following the unanimous jury verdict in April.
Criminal charges
But Do Kwon still faced related criminal charges in the US and Singapore, and both the United States and South Korea continued to seek his extradition.
Kwon for his part denied wrongdoing, but for a while he was effectively on the run (although he denied this), as he did not reveal his whereabouts when police in Singapore could not locate him, after South Korea had issued an international arrest warrant, and Interpol issued a “red notice” for his arrest.
After months of searching Do Kwon was eventually arrested in Podgorica, the capital city of the Balkan country of Montenegro in March 2023.
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.
Extradition battle
Do Kwon had initially been sentenced to four months in prison in Montenegro for using fake travel documents, and had been held in custody there pending his extradition.
The High Court in Montenegro had in February 2024 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, which had issued an international arrest warrant for him ahead of the US.
However Do Kwon successfully appealed that High Court ruling, after the panel of the Court of Appeals said the approved US extradition request was not legally sound.
Then in early March 2024 the high court in Montenegro ruled that Kwon could be extradited to South Korea to face criminal charges. However Kwon appealed this, but the Montenegro appeals court then rejected that appeal from Do Kwon.
Despite the ruling, the Montenegrin government continued to weigh competing extradition requests from both the US and South Korea.
And then last week, Montenegrin Justice Minister Bojan Bozovic had ordered Kwon’s extradition to the United States, after the Supreme Court ruled all legal conditions had been fulfilled.
