From Montenegro to South Korea: Terraform’s Do Kwon faces extradition

South Korea is currently awaiting the extradition of Terraform Labs co-founder Do Kwon from Montenegro, following reports that a court in the Balkan nation had overturned a previous decision to extradite the jailed crypto entrepreneur to the United States. The Justice Minister of South Korea, Park Sung-jae, has stated that his ministry would take the necessary measures once they receive an official notice.

Kwon, who is also known by his full Korean name Kwon Do-hyung, is at the centre of a complex legal situation. He has expressed a preference for extradition to South Korea over the United States. This preference is likely influenced by the fact that if convicted in South Korea, Kwon would face a relatively lighter sentence, as the longest prison term for financial crimes in the country is 40 years.

The U.S. Securities and Exchange Commission (SEC) has filed fraud charges against Kwon, with a civil trial scheduled to start on March. These charges stem from the collapse of the TerraUSD and Luna cryptocurrencies in May 2022, which authorities have said caused about $40 billion of losses in crypto markets. The SEC alleges that Terraform Labs and Kwon deceived investors about the stability of TerraUSD, a “stablecoin” designed to maintain a constant $1 price.

Do Kwon’s case highlights risks in crypto sector

In addition to the SEC’s charges, Kwon also faces related U.S. criminal charges and has been held in Montenegro since his arrest in March last year. He is separately under indictment in South Korea, which has also sought his arrest.

The decision of the Montenegrin court to overturn the initial extradition ruling to the United States has added another layer of complexity to this case. It remains to be seen how this legal tug-of-war will unfold and what implications it will have for Kwon, Terraform Labs, and the broader crypto market.

In conclusion, the case of Do Kwon serves as a stark reminder of the legal complexities and potential risks associated with the rapidly evolving world of cryptocurrencies. As countries around the world grapple with how to regulate and oversee this burgeoning industry, cases like this will likely continue to emerge, underscoring the need for clear and comprehensive regulatory frameworks.