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Do Kwon Bailed in Montenegro – But What is Going On in Terraform US Civil Case?

Last Updated March 26, 2024 9:54 AM
Teuta Franjkovic
Last Updated March 26, 2024 9:54 AM
By Teuta Franjkovic
Verified by Peter Henn


Key Takeaways

  • Do Kwon was released from prison and sent directly to immigration officials.
  • A Montenegro court halted his extradition because of a prosecutor challenge.
  • The prosecutor said simplified extradition was wrong because of requests from both South Korea and the US.
  • Terraform Labs and its founder, Do Kwon, are accused of constructing a “house of cards” and deceiving investors.

Beleagured Terraform Labs founder, Do Kwon, has hit yet problem. Kwon, who was on the verge of extraditon, is now held at  a center for illegal migrants in Montenegro. 

Do Kwon Detained in Montenegro Despite Sentence Completion

This weekend, video clips of Kwon, , showed him looking slimmer and dressed in loose clothing. There were, however, a group of police officers surrounding him. 

Do Kwon, a South Korean citizen, was released from prison  yesterday morning after completing his sentence. However, he is not a free man. Police escorted him directly to immigration officials, and after a five-hour interrogation, transferred him to a detention center for foreigners.

Kwon’s lawyer, Goran Rodić, considers this procedure illegal and plans to appeal to the Administrative Court. He argues the court should have allowed Kwon to await his extradition ruling and defend himself while free.

According to  Rodić, immigration officials took Kwon into custody yesterday morning under heightened security measures. He claims his client spent five hours under unlawful questioning at the police headquarters. Rodić argues that Kwon, per a previous court decision, should have been released after serving his sentence and allowed to defend himself during the extradition process.

Rodić elaborated :

“From 9 am to 2 pm, an illegal procedure was carried out against our client at the police headquarters. According to the court decision, he should have been released today after completing his sentence and awaited the extradition process while free, as his passport had already been confiscated. However, it seems another order arrived, similar to the ones received the past two days for expedited procedures by the Supreme State Prosecutor’s Office and the Supreme Court of Montenegro. Unfortunately, the basis for this is an unlawful procedure, and under this illegal decision today, Do Kwon will be detained in the immigration center.”

Extradition on Hold: Montenegrin Court Delays South Korea Handover

The Supreme Court Council issued a decision to postpone Kwon’s extradition to South Korea until a ruling on the application for the protection of legality submitted by the Supreme State Prosecutor’s Office.

The justification for the Supreme Court’s decision states that the Supreme State Prosecutor’s Office requested the postponement of the decisions of the Higher Court in Podgorica and the Court of Appeals before they made a ruling on the submitted application for the protection of legality.

Montenegro Prosecutor Objects to Simplified Extradition for Do Kwon

The key point of the Supreme State Prosecutor’s Office application is that the lower courts established that Do Kwon’s extradition to South Korea met the legal presumptions. It also said the defendant agreed to a simplified extradition procedure.

The Office stated in the application that the cited decisions “violated the law and that this violation is reflected in the fact that simplified extradition is only applied in extradition cases where one request has been submitted.”

The application for the protection of legality also stated that in other situations, where there are two or more extradition requests, there is no room to apply the simplified extradition procedure. Therefore, the regular extradition procedure should go ahead.

 SEC Calls TerraUSD a “House of Cards” Built on Deception

According to the United States Securities and Exchange Commission (SEC), Terraform and Kwon built  a “house of cards”. They also, the SEC claims, deceived investors over the stability of a cryptocurrency whose downfall had widespread effects on the markets in 2022.

An SEC lawyer made this accusation ) to a Manhattan jury when the civil fraud trial began on Monday. The SEC charged Kwon and the Singapore-based blockchain company with misleading investors in 2021 about the stability of the TerraUSD stablecoin.

Also, the regulator said Terraform falsely claimed a popular Korean mobile payment application used its blockchain technology.

SEC attorney Devon Staren stated :

“Terra was a fraud, a house of cards, and when it collapsed, investors lost nearly everything.”

SEC Blames TerraUSD “Death Spiral” for $40 Billion Investor Loss

Louis Pellegrino, representing Terraform, argued that the SEC’s lawsuit is based on selectively chosen evidence. Furthermore, he claimed, prosecution witnesses would receive rewards should the SEC prevail.

Meanwhile, Kwon‘s lawyer, David Patton, said his client never claimed the crypto was risk-free.

Kwon was the architect behind TerraUSD and Luna, the latter being a more conventional token whose value was volatile but connected to TerraUSD. The SEC estimates that the combined losses for investors in these two tokens exceeded $40 billion when TerraUSD’s peg to the dollar failed to hold in May 2022.

This failure not only led to a drastic decrease in their value but also pulled down the price of other cryptocurrencies. This, in turn, caused broader turmoil in the cryptocurrency market and led to numerous companies declaring bankruptcy.

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