The Constitutional Court of Montenegro has dismissed the appeal of Do Kwon, co-founder of Terraform Labs, against the extradition. This decision removes a significant legal barrier in the extradition process.
According to information, this decision was fully agreed upon. The court pointed out the legal flaws in Kwon's appeal and confirmed the previous ruling supporting the extradition.
Do Kwon is likely to be extradited to the U.S.
The case is currently being transferred to the Minister of Justice of Montenegro, who will decide whether Kwon will be extradited to South Korea or the United States. Reports from South Korea indicate that the possibility of extradition to the U.S. seems stronger, aligning with the position of the Justice Ministry.
Both countries want to prosecute Kwon on charges related to the collapse of the Terraform Labs cryptocurrency ecosystem, involving TerraUSD and Luna. The collapse in May 2022 wiped out approximately $40 billion from the market, marking one of the largest collapses in financial history.
The main transactions leading to the collapse of the Terra stablecoin on May 7, 2022. Source: Chainalysis
Notably, the collapse of the UST stablecoin marked the beginning of the notorious cryptocurrency 'winter' in 2022. The domino effect exposed the misconduct of other major platforms such as FTX and Celsius. This led to increased scrutiny by regulators towards stablecoins and DeFi globally.
In March 2023, Kwon was arrested in Montenegro while trying to move with a fake passport. Due to the seriousness of the case, this extradition is seen as a potential precedent for cross-border law enforcement related to cryptocurrency crimes.
Do Kwon was photographed outside the Montenegro Court. Source: X (formerly Twitter).
The largest financial settlement in SEC history
In early June 2024, Terraform Labs reached an agreement with the SEC, agreeing to pay $4.47 billion. The settlement includes $3.6 billion in restitution, $420 million in civil penalties, and $467 million in pre-judgment interest.
In addition, Do Kwon has also been ordered to pay over $200 million in penalties. This includes $110 million in restitution, $80 million in civil penalties, and $14.3 million in interest.
This move comes amid reports about Kwon's political connections in Montenegro. In 2023, the country's prime minister called for an investigation into allegations that Kwon had financial ties to a political rival.
Kwon is reported to have supported the European Now party, led by Milojko Spajic. This backing has raised questions about the potential influence on his extradition process.
Overall, the court's ruling has brought Kwon closer to facing justice while highlighting the challenges of international legal coordination in the cryptocurrency sector.
