The founder of the company Terraform, Do Kwon, was arrested in Montenegro along with the financial director Hon Chang Joon, and South Korea and the United States requested his extradition. Do Kwon faces fraud charges in both countries following the implosion of his company in May 2022, which cost investors $40 billion and rocked the cryptocurrency market.Ffake letters
According to Montenegrin authorities, Do Kwon and his financial director had “falsified Costa Rican documents” before the flight in Dubai, and an inspection of the luggage also revealed forged documents. A Montenegrin court announced that two suspects had been charged and remanded in custody for up to 30 days “due to the risk of flight”.
After Do Kwon’s arrest, South Korea was forced to formally request his extradition, while a federal grand jury in the United States indicted him on eight counts, including wire fraud and wire fraud. According to the US Securities and Exchange Commission (SEC), Do Kwon is accused of “orchestrating a multi-billion dollar crypto-asset fraud”. The businessman must now appear in two cases in Montenegro, namely the case of alleged forgery and the possibility of his extradition.
Cryptocurrency firm
Terraform Labs is the parent company of Terra, a cryptocurrency described as stable (“stablecoin”) which in theory provides more security for investors in this highly volatile sector. Cryptocurrencies are under increasing scrutiny from authorities, especially after the collapse of FTX, a major trading platform. Many investors lost their life savings when Earth and Moon cryptocurrencies, founded by Kwon, went under. South Korean authorities have opened several criminal investigations.
Do Kwon is believed to have fled South Korea to Singapore before the demise of his company in May 2022. In September, South Korean prosecutors asked Interpol to issue a red notice to the organization’s 195 member countries and revoked his passport. A person’s nationality and other circumstances must be taken into account in deciding extradition, according to Montenegrin authorities.
Extradition
The extradition of Do Kwon is a sensitive issue that involves several countries and could take time to resolve. Meanwhile, the case once again explained the risks to investors in the cryptocurrency market, which is often associated with a lack of transparency and opacity.
As pilots and regulators around the world begin to crack down on the fraud and lack of transparency in this sector, more incidents like this are likely to occur in the future.
