Montenegro to Extradite Crypto Tycoon Do Kwon to the United States

Montenegro announced it will extradite Do Kwon, the South Korean cryptocurrency entrepreneur and founder of Terraform Labs, to the United States, where he faces charges linked to the collapse of his company.

Kwon is accused of orchestrating a multi-billion-dollar fraud that caused the bankruptcy of Terraform Labs, wiping out $40 billion in investor funds and destabilizing global cryptocurrency markets.

Extradition Decision

Justice Minister Bojan Bozovic confirmed the extradition approval after a lengthy legal battle spanning a year and a half. The Montenegrin justice ministry stated that most legal criteria favored the U.S. extradition request.

Kwon’s lawyers, however, criticized the decision, claiming it violates European conventions on extradition. They plan to appeal to Montenegro’s constitutional court and the European Court of Human Rights.

Kwon, also wanted in South Korea, was arrested in March 2023 in Podgorica while attempting to board a flight to Dubai using a fake Costa Rican passport. Before his arrest, he had been on the run, leaving South Korea and later Singapore after Terraform Labs’ collapse in May 2022.

Terraform Labs’ Collapse

Terraform Labs developed TerraUSD, a so-called “stablecoin” pegged to stable assets like the U.S. dollar, and its sister token Luna. Marketed as groundbreaking innovations, they gained global traction and billions in investments. However, in May 2022, both tokens plummeted in value, triggering a financial crisis for investors.

Experts have labeled the scheme a glorified Ponzi scheme that devastated many investors’ life savings.

In January, Terraform Labs filed for bankruptcy protection in the U.S., aiming to restructure while dealing with legal proceedings in Singapore and the United States.

Legal and Industry Fallout

Do Kwon’s extradition highlights the increasing scrutiny of cryptocurrency markets, which have faced multiple controversies, including the high-profile collapse of the FTX exchange.

Montenegro had earlier deported Kwon’s business partner, identified only as J.C.H., to South Korea. Meanwhile, Kwon’s lawyers accuse Montenegrin authorities of delaying notification of the extradition decision to hinder appeals.

As global regulators tighten their grip on cryptocurrencies, Kwon’s case serves as a stark reminder of the risks in the unregulated digital asset market.