Montenegro has officially extradited Do Kwon, co-founder of Terraform Labs, to the United States. This move came after a year of legal struggles involving competing extradition requests from South Korea and the United States, which was ultimately resolved by the Montenegro Department of Justice.
Extradition details
On December 31, 2024, Montenegro police handed Do Kwon over to FBI officers at Podgorica Airport. Prime Minister Milojko Spajić confirmed the transfer through a post on X, stating that Kwon would face charges in the United States. This decision came after Justice Minister Bojan Božović rejected South Korea's extradition request just days earlier.
In a statement, Božović emphasized Montenegro's uncompromising stance against fraud while still supporting the legitimate innovation of technology. He regarded the extradition as proof of Montenegro's commitment to international justice.
The legal battle and the collapse of Terra/Luna
Do Kwon's troubles began with the catastrophic collapse of the stablecoin TerraUSD and its sister token Luna in May 2022. Promoted as a groundbreaking financial tool, TerraUSD relied on an algorithmic mechanism that critics deemed unstable. As its value plummeted, the connected Luna token also collapsed, wiping out $33.9 billion in market value.
The collapse sparked global backlash, with regulators warning about systemic risks posed by poorly managed stablecoins. Authorities in both the United States and South Korea charged Kwon with fraud, market manipulation, and other offenses.
Arrest and lengthy legal battle
After months of hiding, Kwon was arrested in Montenegro in March 2023 while trying to travel with fake passports from Costa Rica and Belgium. His arrest added forgery charges to his growing list of legal issues.
For more than a year, the Montenegro court has been considering the case, with Kwon's team of lawyers filing numerous appeals to delay the process. Ultimately, Montenegro prioritized the request from the United States, citing comprehensive criteria assessed by the Department of Justice.
In the United States, Kwon faces eight serious charges, including securities fraud, wire fraud, and conspiracy. The Securities and Exchange Commission (SEC) has also filed a civil lawsuit against Kwon and Terraform Labs. In April 2024, the SEC concluded that both were guilty of fraud, imposing a penalty of $4.5 billion.
Gary Gensler, Chairman of the SEC, stated:
"We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosures as required for various types of cryptocurrency asset securities, most notably for Luna and TerraUSD. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing serious losses to investors."