The U.S. may have gained an edge in a race with South Korea to extradite Terraform Labs chief Kwon Do-hyung from Montenegro on charges of fraud related to the collapse of the US$40 billion Terra-Luna cryptocurrency project in May last year, according to a report by Yonhap News on Wednesday. The report cites Montenegro Justice Minister Marko Kovac saying Washington requested the extradition of the South Korean national before Seoul, following his arrest in the country on March 23 for allegedly traveling on false travel documents.

Fast facts

  • Although the U.S. submitted the extradition request ahead of South Korea, Kovac said he cannot confirm which country will eventually take custody of Kwon, South Korea’s Yonhap News reported.

  • While South Korea requested the extradition of both Kwon and Han Chang-joon, Terraform Labs’ chief financial officer who was traveling with him, the U.S. reportedly requested only Kwon.

  • Kovac said before any extradition, Kwon has to first face charges in Montenegro of traveling on forged travel documents. Conviction could lead to a prison sentence of a minimum three months to a maximum five years under local laws.

  • His legal representative in Montenegro said Kwon is ready to fight his case up to the local Supreme Court if necessary, claiming his travel documents are valid, according to Yonhap. He and Han can be detained for 30 days while police investigate the case, a local prosecutor said Monday.

  • The US$40 billion Terra-Luna stablecoin and crypto project collapsed in May last year and Kwon is wanted in South Korea on charges including fraud and capital markets law violations. New York prosecutors are also looking to extradite Kwon on charges including securities, commodities and wire fraud.

  • Do Kwon left his home in Singapore late last year after Interpol issued a “red notice’’ for his apprehension at the request of South Korea. Kwon has denied all the charges against him. Terraform Labs has stated that South Korea’s investigation of Terra-Luna has become highly politicized and claims the accusations are baseless.

  • Meanwhile, a South Korean court is reviewing a second request from local prosecutors to arrest Terraform Labs co-founder Shin Hyun-seung, for charges including fraud, breach of trust and violation of the capital markets law. Shin has rejected the accusations, claiming he cut ties with Kwon and Terraform in 2020, or well before the company imploded.