Do Kwon Face Extradition to South Korea Instead of the US

As determined by a Montenegrin appeals court, Do Kwon, the co-founder of the now-bankrupt Terraform Labs, will be deported to South Korea, not the United States. 

This decision comes after intense legal scrutiny and highlights the ongoing saga surrounding the dramatic $40 billion Terra/LUNA ecosystem collapse in May 2022.

Legal proceedings in Montenegro

The Appellate Court of Montenegro upheld a previous decision by the High Court of Podgorica, opting to extradite Kwon to South Korea. This ruling overrides the competing extradition request from the United States, where authorities are also keen to press charges. 

Source: X

Kwon, embroiled in legal troubles since the Terra/LUNA fallout, was arrested in Montenegro in March 2023 for attempting to travel to Dubai with a forged Costa Rican passport. After serving a brief prison sentence for using forged documents, he was released on bail, with conditions to prevent further flight.

Terraform Labs’ controversial collapse

The controversy began with the failure of TerraUSD, a supposed stablecoin pegged to stable assets like the U.S. dollar, which aimed to mitigate cryptocurrency volatility. However, its collapse triggered a series of bankruptcies within the crypto sector, notably affecting FTX, another major crypto exchange. 

Kwon, who had relocated to Singapore citing safety concerns for his family before the crash, faced accusations alongside five other Terraform officials. They were charged with fraud and financial crimes linked to the debacle. Despite these allegations, Kwon maintained in his initial interviews post-collapse that he did not foresee catastrophic failures, stating his responsibility for any exploitable weaknesses in the system.

Settlements and Legal Battles in the United States

Simultaneously, Terraform Labs has been engaged in legal battles with the U.S. Securities and Exchange Commission (SEC). The company and Kwon recently agreed to settle with the SEC for around $4.5 billion in restitution and civil penalties, a significant reduction from the initially proposed $5.3 billion. This agreement also includes a permanent prohibition against Kwon and Terraform Labs from trading crypto asset securities within the Terra ecosystem.

Despite the settlement, Terraform Labs continues to deny the South Korean charges, arguing that the investigation has been politicized and asserting that Luna does not meet the security criteria under South Korean law. The focus of the U.S. lawsuit was primarily on whether Luna should be governed by securities regulations, reflecting a global regulatory concern over the classification and treatment of digital tokens.

Bankruptcy and financial outlook

Earlier this year, Terraform Labs filed for bankruptcy in Delaware, disclosing liabilities estimated between $100 million and $500 million, closely matching their declared assets. This filing marked another chapter in the ongoing financial and legal repercussions following the company’s collapse, setting the stage for further developments in the crypto regulatory landscape.

The legal proceedings and decisions surrounding Do Kwon and Terraform Labs continue to unfold, with significant implications for the global cryptocurrency market and regulatory approaches. The focus now turns to the forthcoming legal challenges Kwon will face in his native South Korea.

The post Do Kwon Face Extradition to South Korea Instead of the US first appeared on Coinfea.