US, South Korea Request Do Kwon's Extradition Over Terra/LUNA Collapse

Do Kwon, the founder of Terraform Labs, was arrested in Montenegro on Thursday morning after months of hiding.

Kwon was reportedly trying to flee Dubai with falsified documents when he was detained at the airport in Podgorica, Montenegro's capital, according to a report by TechCrunch on Friday, March 24.

Fraud Allegations

A few hours after Kwon's arrest, US authorities accused him of participating in the collapse of the Terra/LUNA stablecoin, which caused the loss of around $40 billion in the cryptocurrency market, and charged him with eight criminal offenses, including securities fraud and conspiracy.

Do Kwon, who is wanted in South Korea and the US on allegations of fraud, has been apprehended in Montenegro, according to Interpol. Kwon now has criminal cases pending against him in both the US and South Korea, so it's unclear which nation he will be transferred to first.

Kwon's extradition to New York will be sought by US federal prosecutors, who have also stated that South Korea will request his extradition.

A South Korean court has issued an arrest order for Kwon since the Terra/LUNA collapse in May 2022, and Interpol issued a red notice-an appeal to law enforcement agencies around the world-in September to apprehend Kwon, who claimed in an interview in August that he was not facing any charges.

According to reports, South Korean prosecutors asked the regional foreign affairs ministry in October to revoke Kwon's passport if he did not return it by September 15th. It appears that Kwon's passport, which had not been returned by that point, was revoked.

Kwon's Whereabouts

Kwon's whereabouts were unknown for a while, but in December, he reportedly registered his residence in Serbia through the United Arab Emirates. Kwon is involved in numerous criminal proceedings and has asserted that the allegations leveled against him are false.

He added that it was up to each independent nation to determine how to interpret the Interpol red notice that was sent to him.

The news of Kwon's arrest shook the cryptocurrency community. It is unclear what impact, if any, this will have on Terraform Labs' operations.

The company recently caught the US Securities and Exchange Commission's (SEC) attention after charges were made that it had defrauded American investors who bought its crypto assets, LUNA and Terra.

Kwon's arrest highlights the need for greater regulation of the cryptocurrency industry. Governments and regulators around the world are grappling with how to deal with the fast-evolving crypto industry, which is largely unregulated and often operates in a gray area of the law.