Montenegro Extradites Terraform Labs CEO Do Kwon to the US for Fraud Charges

Montenegro finally extradited Do Kwon, the former CEO of Terraform Labs, to the United States on December 31st, in a crucial development. Kwon, a South Korean national, was turned over to US law enforcement, including FBI agents, at Podgorica airport.

He faces charges of conspiracy to commit fraud tied to the collapse of Terraform Labs’ cryptocurrencies, TerraUSD and Luna, which caused an estimated $40 billion in investor losses and destabilized global crypto markets in May 2022.

Do Kwon Extradited to US

The latest news comes after the Constitutional Court of Montenegro unanimously rejected Kwon’s appeal challenging his extradition ruling last week.

Kwon’s arrest in March 2023 at Podgorica airport occurred after months of evasion that included stops in South Korea and Singapore. He was caught attempting to fly to Dubai using a falsified Costa Rican passport.

Terraform Labs gained prominence in 2021 as its Luna and TerraUSD cryptocurrencies surged in popularity. Kwon, on the other hand, earned a reputation as a controversial figure and a brash entrepreneur, labeling his 2018 cryptocurrency as his “greatest invention.” With backing from prominent investors such as Lightspeed Venture Partners and Galaxy Digital, he cultivated a devoted fanbase of “Lunatics” while he openly ridiculed critics.

However, the ecosystem’s catastrophic failure in May 2022 obliterated over 99% of its value within two days, triggering a ripple effect that wiped hundreds of billions of dollars from the broader crypto sector. This crash eroded confidence in the industry and sparked massive regulatory scrutiny across the world.

Legal Troubles

Beyond the current US proceedings, Kwon also faces charges in South Korea, which had sought his extradition as well. Despite Montenegro’s lack of formal extradition treaties with either country, the justice ministry determined that the US request met the necessary legal criteria.

Kwon, who denies wrongdoing, has been accused by US authorities of orchestrating a large-scale securities fraud that misled investors about TerraUSD’s stability and its integration with the Terraform blockchain.

In February 2023, the US Securities and Exchange Commission (SEC) filed a lawsuit against Kwon and Terraform Labs, wherein the agency cited their role in the market turmoil. They later agreed to a $4.5 billion settlement with the SEC.

The extradition concludes an 18-month legal struggle and sets the stage for Kwon to face charges that may redefine accountability in the volatile cryptocurrency industry.