Do Kwon, the mastermind behind the TerraUSD and Luna disaster that wiped out 40 billion dollars in cryptocurrency, will finally come to the United States to face justice. Montenegro's Justice Minister, Bojan Božović, signed the extradition order, prioritizing the U.S. request over the South Korean one.

This decision was made after the Supreme Court of Montenegro confirmed that all legal conditions for extradition had been met. The court evaluated criteria such as the severity of the charges against Kwon and the order of requests, leaning toward the United States.

The Justice Department stated, 'Most of the criteria set by law support the extradition request from U.S. authorities,' effectively extinguishing South Korea's hopes of prosecuting Kwon on its own territory.

The rise and catastrophic fall of TerraUSD and Luna

Kwon not only created TerraUSD and Luna, he also built an empire based on hype, algorithms, and a dangerously flawed financial model. TerraUSD was marketed as a stablecoin always worth 1 dollar.

But unlike traditional stablecoins backed by tangible assets, TerraUSD relies on its connection to Luna, another cryptocurrency. The idea is very simple: TerraUSD can be exchanged for 1 dollar's worth of Luna, creating an artificial fixed exchange rate.

To make the deal more attractive, Kwon launched the Anchor Protocol, offering an annual return of 20% on TerraUSD deposits. Yes, 20%. For a while, this crazy interest rate attracted investors like bees to honey.

Then everything blew up. On May 7, 2022, the fixed rate of TerraUSD dropped to 0.99 dollars. Investors panicked, selling off their shares. In a desperate attempt to fix the situation, Terraform Labs flooded the market with Luna, causing its price to plummet.

Luna, once valued at over 100 dollars, became worthless in just a few days. Billions of dollars in Bitcoin reserves were deployed in vain to stabilize the collapse. The consequences not only crushed TerraUSD and Luna but also caused a domino effect, leading other cryptocurrency companies to go bankrupt and wiping out 2 trillion dollars in market value.

The scale of the destruction has drawn the attention of regulators worldwide. U.S. authorities accused Kwon of defrauding investors and hiding assets. South Korea, where Luna has 280,000 holders, is not far behind.

Lawyers there have accused him of fraud and illegal fundraising, prompting prosecutors to issue an arrest warrant in September 2022. At that time, Kwon had disappeared from Singapore, forcing Interpol to issue a red notice.

The collapse of a fugitive

Kwon did not run away forever. His globe-trotting adventures ended in Podgorica, Montenegro, on March 23, 2023. He and Terraform Labs' former CFO, Han Chang-joon, were arrested while trying to board a private jet to Dubai with fake passports. The arrest was almost cinematic—a notice from Interpol, forged documents, and a last-minute arrest at the airport.

Immediately, both the United States and South Korea requested extradition. But first, Montenegro also had its own issues to resolve. Kwon had to sit in jail for four months in Montenegro for forgery. After being released, he was transferred to a foreign reception center, awaiting a decision that has now placed him in U.S. custody.

Han Chang-joon was not so lucky—or perhaps he was lucky. In February of this year, Montenegro sent him back to South Korea. Terraform Labs did not back down without a fight. The company dismissed South Korea's accusations as politically motivated, arguing that Luna does not qualify as a security under the laws of that country.

They called these accusations 'baseless,' a term that perhaps has little value now that 40 billion dollars of investors' money has evaporated.

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