Do Kwon Lives to Fight Another Day as Extradition Halted

Beleaguered cryptocurrency entrepreneur Do Kwon secured another victory this week in his battle against extradition, as a Montenegrin appeals court halted the process demanding further review of the case.

TLDR

• Do Kwon won a second appeal against a Montenegrin court order approving his extradition to the U.S. and South Korea to face criminal charges.
• The appellate court annulled the previous ruling upholding extradition due to “significant violations” and an “unclear” decision lacking examination of case specifics.
• This represents a victory for Kwon after initially winning an appeal in November 2022 only to have it later overturned in December.
• Kwon faces charges relating to the collapse of the TerraUSD stablecoin and broader Terra ecosystem last May, which authorities allege was a multi-billion dollar fraud.
• Kwon’s former Terraform Labs CFO was extradited to South Korea earlier this week, but Kwon has so far avoided a similar fate as his case faces continued scrutiny.

Kwon faces criminal charges in both South Korea and the United States relating to the catastrophic collapse in May 2022 of the TerraUSD algorithmic stablecoin and its supporting Luna token. The debacle wiped out an estimated $60 billion in investor funds.

Prosecutors allege Kwon perpetrated fraud by concealing the weaknesses in TerraUSD’s design that made the coin susceptible to collapse at scale. Kwon denies those accusations. He was visiting Montenegro when arrest warrants were issued and was subsequently detained for traveling with falsified paperwork.

A Montenegrin lower court initially approved Kwon’s extradition, but he won an appeal in November 2022 citing insufficient basis. The country’s high court then overturned that ruling in December, signing off on the U.S. and South Korean extradition requests.

Kwon challenged the decision again, with his lawyers arguing the court faced political pressure and failed to sufficiently investigate the specifics of the case. This week’s appellate court ruling sided with Kwon, annulling the previous extradition approval due to “significant violations” in the legal process.

The court called the high court’s decision “incomprehensible,” lacking clarity and justification while providing unsatisfactory reasoning. It sent the case back to lower courts for a retrial and fresh ruling.

The see-sawing legal judgement allows Kwon, currently serving a four-month sentence in Montenegro for traveling with false documentation, to stay put for now. However it does not end the extradition threat.

In contrast, former Terraform Labs CFO Han Chang-Joon failed in his own court appeals and was extradited earlier this week to South Korea, where he will stand trial around the Terra ecosystem collapse.

While Do Kwon succeeded in buying more time on his fate for now, prosecutors remain determined to haul in the man they see as responsible for masterminding one history’s largest crypto fraud schemes and making an example out of him.