Do Kwon, full name Kwon Do-hyung, the key figure in the Terra-Luna cryptocurrency crash, is to be extradited to the United States from Montenegro after an 11-month detention, marking a significant turn in the case involving a massive $37.6 billion market cap loss.
The High Court of Podgorica in Montenegro announced on Feb. 21, that he will be extradited to the U.S. where he has been indicted for crimes committed in the financial operations sector. The basis for the decision was not disclosed to the public.
Terra, which was once among the top 10 cryptocurrencies by market cap, saw a massive 99.99% price collapse in mid-May 2022, causing a market cap loss of around 50 trillion won ($37.6 billion) for Terra and Luna. The founder of Terraform Labs, Do Kwon, has been accused of continuing to issue Terra and Luna despite knowing the risks of their prices collapsing, and of not informing investors of these risks.
The U.S. Securities and Exchange Commission (SEC) filed a civil lawsuit against Kwon and Terraform Labs in Feb. 2022, for orchestrating a multi-million dollar crypto asset securities fraud. A month later, Kwon was indicted by the Federal Prosecution in New York on eight charges, including fraud and market manipulation.
The S. Korean authorities are currently investigating Kwon, who is suspected of involvement in the Terraform Labs scandal. Han Chang-joon, who is Terraform Labs’ CFO and a close associate of Kwon, was extradited to S. Korea and indicted on Feb. 21 while in custody.
Before the Terra-Luna incident came to light, Kwon left for Singapore in April 2022 and subsequently disappeared. It is believed that he traveled through the United Arab Emirates and Serbia before entering Montenegro. He was arrested at a local airport while attempting to board a private jet to Dubai using a fake Costa Rican passport on Mar. 23, 2023.
Both S. Korea and the U.S. have requested Montenegro to extradite Kwon as a criminal. The decision on the country of extradition is made by Montenegro’s courts based on their criteria, which is often influenced by the principle of reciprocity, meaning countries with Montenegro have exchanged or are likely to exchange more extradited criminals.
The extradition of Kwon to the U.S. is aligned with the wishes of Terra and Luna investors. They hoped for a severe sentence. South Korea’s maximum sentence for economic crimes is approximately 40 years. On the other hand, the U.S. adopts a cumulative sentencing system in which the individual crimes are sentenced separately, allowing for sentences exceeding 100 years.
