Interpol has confirmed that Terraform Labs founder Do Kwon has been arrested in Montenegro’s capital city airport attempting to board a plane to Dubai with falsified Costa Rican and Belgium passports. The United States has subsequently filed eight counts of criminal charges against Kwon.
Montenegrin authorities confirmed his identity through a fingerprint match with the help of Interpol and South Korean officials, where Kwon is wanted on charges related to the collapse of his company’s algorithmic stablecoin Terra. The country revoked Kwon’s South Korean passport and sought the help of Interpol back in September to arrest the fugitive, who fled from his native South Korea to Singapore, then to Dubai, before last being spotted in Serbia back in December.
The United States Securities and Exchange Commission (SEC) filed securities fraud charges against Kwon in February. It cited the Anchor Protocol’s 20% interest rate offer on Terra deposits. Now, the US District Court Southern District of New York has charged Kwon with eight counts of criminal acts:
- conspiracy to defraud,
- two counts of commodities fraud,
- two counts of securities fraud,
- two counts of wire fraud,
- and market manipulation.
Kwon has consistently denied that he was a fugitive and claimed charges against him were “politically motivated.” He taunted authorities on Twitter, offering to set up a meeting with law enforcement, writing the words “pew pew.”
Read more: Explained: SEC allegations against Do Kwon and Terraform Labs
Now that he’s been caught, Kwon can revel in the fact that he’s a highly desirable man — indeed, he’s wanted in at least three countries. Along with South Korea and the US, Singapore is keen to bring Kwon in to face its own line of questioning. At the start of March, the island nation announced that it had finally opened an investigation into the founder.
Montenegro doesn’t have an extradition treaty with the US nor with South Korea. However, both the US and South Korea are now seeking extradition. South Korean authorities previously travelled to Serbia, where Kwon was last spotted, in hopes of negotiating a handover agreement.
It remains unclear where Kwon will end up.
How Do Kwon got here: A recap of Terra’s collapse
Terra and its counter-coin, LUNA, collapsed in May 2022 after Terra lost its peg to the dollar. The analytics company Elliptic says it wiped out $42 billion in value.
Elliptic also scrutinized Luna Foundation Guard’s (LFG) shuffling of the $3.5 billion reserve fund, which it held in bitcoin. Luna Foundation Guard said it would lend $750 million bitcoin to OTC trading desks to attempt to recover Terra’s target price of $1.
The LFG moved its entire bitcoin holdings to Gemini and Binance. Elliptic couldn’t confirm that LFG used the bitcoin holdings’ value to buy Terra.
Read more: Top South Korean officials follow fugitive Do Kwon to Serbia
The collapse caused a cascading effect throughout the digital asset industry. Celsius Network declared bankruptcy due to overexposure to Terra’s associated DeFi app, Anchor Protocol. Three Arrows Capital also declared bankruptcy.
The Terra/LUNA collapse also deepened an existing decline in overall digital asset markets. Bitcoin dropped under $30,000 when Terra disintegrated and dipped under $20,000 in June 2022.
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Source: https://protos.com/will-arrested-terra-founder-do-kwon-be-extradited-to-the-us-or-south-korea/