Montenegro to Extradite Terraform Labs Founder Do Kwon to the US
Montenegro’s Ministry of Justice announced its decision to extradite South Korean cryptocurrency entrepreneur Do Kwon to the United States. Kwon, who is also wanted in South Korea, faces allegations of orchestrating a multi-billion-dollar fraud linked to the collapse of his company, Terraform Labs.
For over a year, both the United States and South Korea have been pursuing Kwon’s extradition. His company’s downfall in 2022 reportedly wiped out $40 billion of investors’ funds, causing a ripple effect across global cryptocurrency markets.
Decision Favors US Extradition Request
Justice Minister Bojan Bozovic approved the extradition of Kwon, formally known as Kwon Do Hyung, to the United States. The Ministry cited that legal criteria strongly supported the U.S. request over South Korea’s.
“The majority of legal criteria favored the extradition request from U.S. authorities,” the Justice Ministry stated in its announcement.
Kwon was apprehended in March 2023 at the airport in Podgorica, Montenegro’s capital, while attempting to board a flight to Dubai using a forged Costa Rican passport. This arrest ended months of evasion, during which Kwon fled South Korea and later Singapore following Terraform Labs’ collapse.
A Prolonged Legal Battle
Kwon’s extradition process saw numerous legal twists, with Montenegrin courts initially approving and later reversing extradition rulings. The Constitutional Court of Montenegro ultimately cleared the way on December 24, ruling that Kwon’s right to a fair trial had been upheld and affirming his consent to expedited extradition to both South Korea and the U.S.
Montenegro had already deported Kwon’s business associate, identified as J.C.H., to South Korea in February.
The Rise and Fall of Terraform Labs
Terraform Labs gained notoriety for creating TerraUSD, a so-called “stablecoin” pegged to the U.S. dollar to avoid price volatility. Kwon marketed it as a groundbreaking innovation in the cryptocurrency world, attracting global attention and billions in investments.
However, TerraUSD and its sister token, Luna, plummeted in May 2022, erasing billions in value and devastating countless investors. Critics have likened Kwon’s operations to a Ponzi scheme, leaving many victims with significant financial losses.
Bankruptcy and Legal Challenges
In January, Terraform Labs filed for bankruptcy protection in the United States. The company stated that the move aimed to allow it to continue operations while addressing ongoing legal disputes in Singapore and the U.S.
Terraform also pledged to fulfill financial obligations to employees and vendors, despite mounting regulatory scrutiny of cryptocurrencies, especially following the collapse of major platforms like FTX.
