Terra Founder Do Kwon Faces US Justice After Extradition Battle

Montenegro's Ministry of Justice has approved the extradition of Terraform Labs founder, Do Kwon, to the United States, dismissing South Korea's competing request. This decision comes amid accusations against Kwon by South Korean authorities for investor deception and asset concealment.

Recently, Montenegro's Supreme Court affirmed that the legal criteria for Kwon's extradition were met, prompting the Ministry of Justice to act accordingly.

As reported earlier by BeInCrypto, the likelihood of Kwon facing trial in the US increased after Montenegro's court rejected his appeal against extradition due to legal insufficiencies. Though no extradition date is set, Kwon’s situation mirrors that of Sam Bankman-Fried, the FTX founder, who faced extradition and was sentenced to 25 years. However, Bankman-Fried’s extradition process was comparatively straightforward.

The Ministry of Justice noted, "After reviewing the Supreme Court ruling, we assessed several factors such as the severity of Kwon's offenses, the crime scenes, and his nationality. A majority of these factors support the US's extradition request."

The Terraform Labs founder is entangled in investigations within both the US and South Korea following a significant cryptocurrency collapse in May 2022, when TerraUSD and Luna wiped out $40 billion from the crypto market. This collapse resulted in bankruptcies across the sector.

Authorities allege Kwon misled investors and suspect asset concealment. In March 2023, Kwon and his business partner, Han Chong Jun, were detained at Podgorica Airport in Montenegro with fake passports attempting to flee to Dubai. Consequently, Kwon received a four-month prison sentence and is currently held at the Spuž Centre for Reception of Foreigners.

"His extradition to the US holds considerable significance for cross-border handling of crypto fraud cases," noted Anndy Lian on X, previously known as Twitter.

In June 2024, Terraform Labs finalized a profound settlement with the SEC, agreeing to pay $4.47 billion in penalties. This agreement includes $3.6 billion in disgorgement fines, $420 million as a civil penalty, and $467 million in pre-judgment interest. Kwon personally owes over $200 million, covering $110 million in disgorgement, $80 million in civil penalties, and $14.3 million in interest.

Amidst legal battles, controversy swirls around claims of Kwon's political connections within Montenegro. Reports allege financial links to local politicians, including Milojko Spajic, head of the Europe Now party, sparking concerns over possible interference in the extradition process. Montenegro’s prime minister called for a probe into these claims in 2023, adding complexity to Kwon's case.