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Do Kwon Extradition and Trial Latest: Will Terra Founder Face Lengthy Jail Time?

Last Updated 8 mins ago
Teuta Franjkovic
Last Updated 8 mins ago
By Teuta Franjkovic
Verified by Peter Henn

  Key Takeaways

  • Montenegrin officials met with the US SEC to discuss the investigation into Do Kwon and potential extradition.
  • The Minister of Justice is now responsible for deciding whether to extradite Kwon to the US or South Korea.
  • Montenegro’s Prime Minister is under scrutiny for alleged ties to Do Kwon and the Terra/Luna collapse.
  • Do Kwon faces charges in both South Korea and the United States.

Montenegrin authorities recently conferred with a delegation  from the US Securities and Exchange Commission (SEC) to discuss the ongoing investigation into Do Kwon, founder of Terraform Labs.

The Minister of Justice of Montenegro, Andrej Milovic, is now responsible for the extradition decision following a ruling by Montenegro’s Supreme Court in early April that designated him as the decision-maker. This comes after initial plans to extradite to South Korea were met with opposition from Montenegrin lawyers.

Should Kwon be extradited to the U.S., He would become the third high-profile crypto founder to face a trial and potentially jail time. Recently, the founder of Binance, Changpeng Zhao, was sentenced to four months in a U.S. prison, while FTX Founder Sam Bankman-Fried received a 25-year prison sentence for orchestrating a major financial fraud.

Until then, Do Kwon will remain in Montenegro.

Montenegro Discusses Do Kwon Investigation, Extradition, and Investor Protection with US SEC

A delegation from the SEC  shared insights on market regulation and emphasized strengthening bilateral cooperation in investor protection and financial market supervision.

The primary focus of a recent meeting was the ongoing investigation into Kwon. Minister Andrej Milovic was briefed on the investigation findings and the current legal actions against Kwon in the United States , as well as the uncertain status of his extradition, which could be to either the US or South Korea.

The backdrop to these developments includes a February 2023 US jury filing  and the verdict  that found Kwon and Terraform Labs liable for civil fraud following the collapse of the UST cryptocurrency. Kwon’s troubles escalated with his March 2023 arrest in Montenegro for using fake documents. After serving his prison term, Do Kwon was transferred to a reception center for foreigners on March 23, 2024, with his passport seized by local authorities.

Moreover, while the SEC has proposed a hefty $5.3 billion fine against Terraform Labs, Kwon’s legal team contends that the SEC is overreaching, arguing that it lacks jurisdiction over crypto assets.

Minister Milovic highlighted  the significance of international collaboration in tackling financial fraud and safeguarding investors, with both parties acknowledging the meeting as a crucial step in enhancing Montenegro-U.S. relations in justice and economic policy.

While the specific details of the discussions remain private, the meeting indicates potential movements in Kwon’s complex extradition situation.

Kwon’s Potential Jail Time in South Korea vs. U.S.

CCN already reported how Montenegro’s top prosecutors were challenging the legality of a decision by the country’s highest court to extradite Terraform Labs co-founder Do Kwon to South Korea. They argued that the High Court exceeded its authority by using an “abbreviated” legal process for the extradition, which should primarily fall under the jurisdiction of the Montenegrin Ministry of Justice.

This judicial tug-of-war comes amid preferences expressed by Kwon and his legal team for extradition to South Korea, where the maximum penalties  for financial crimes typically range from 30 to 40 years.

The Korean criminal justice system  does not categorize criminal offenses into classifications like “misdemeanors” or “felonies,” as seen in some other legal systems. Instead, it differentiates between “intentional” criminal misconduct and “negligent” actions.

Under the Korean Criminal Procedures Act, the statutes of limitations for criminal offenses vary depending on the maximum sentence applicable to each specific crime. For many white-collar crimes, the statute of limitations generally ranges from five to 15 years.

This contrasts sharply with the US, where courts may impose consecutive sentences for each crime a defendant is found guilty of, potentially leading to a much harsher total sentence.

Prosecuting white-collar crimes in the US  is often challenging due to the sophisticated methods perpetrators use to obscure their illegal activities through complex transactions. The Federal Bureau of Investigation (FBI) estimates that white-collar crime costs the United States over $300 billion each year. While individuals are commonly charged with these crimes, the government also possesses the authority to penalize corporations involved in such offenses.

The penalties for white-collar crimes can be severe and include fines, home detention, community confinement, prosecution costs, forfeitures, restitution, supervised release, and imprisonment.

The Federal Sentencing Guidelines recommend harsher prison sentences when at least one victim has suffered significant financial harm.

Montenegrin PM Faces Scrutiny Over Ties to Do Kwon

Earlier this month, Dritan Abazović, President of the Citizens’ Movement URA, expressed frustration  over Montenegro Prime Minister Milojko Spajić’s failure to answer key questions during today’s prime minister’s hour. Abazović queried Spajić about his interactions with Do Kwon, involvement with the DAS Kapital fund in Singapore, and relationships with certain individuals linked to these dealings.

In a televised interview on Adria television , Abazović detailed his questions about Spajić’s potential financial activities, including real estate holdings in Singapore and transactions involving Teraluna tokens, suggesting a significant profit margin that could implicate Spajić in alleged financial misconduct. He also questioned the nature of Spajić’s dealings with a Singaporean citizen named Kimura, seeking clarity on their business arrangements.

Abazović criticized Spajić’s evasiveness, arguing that a straightforward denial or confirmation at the podium would have sufficed if his affairs were in order. He highlighted the gravity of his inquiries, particularly regarding whether Spajić engaged in transactions that might link him to what he termed a “pyramid fraud” related to Terra Luna token, emphasizing the importance of transparency in these allegations.

Do Kwon’s Belgrade Hideout: Luxury Apartment Next to Police Chief

In April it was reported  Do Kwon was residing in a €2 million ($2.2 million) apartment in an exclusive Belgrade neighborhood, just one building away from the city’s police chief, while he was on the run from authorities.

According to DLNews, official Serbian Land Registry documents revealed that the third-floor duplex, located in Ambassador Park—a district popular among diplomats and affluent businesspeople—is owned by Han Chang-Joon, the South Korean national who was arrested with Kwon as they attempted to escape to Dubai.

Han also owned two parking spaces in the building. Until this revelation, details of Kwon’s hideout and how he managed to evade capture remained unknown. Both Interpol and South Korean police have been actively pursuing Kwon, issuing a red notice and an arrest warrant for his associate Han, following the $60 billion collapse  of Terra Luna last May.

Do Kwon and Han Chang-Joon, the former CFO of Kwon’s Terraform Labs, were reportedly mingling  with the upper echelons of society in Belgrade while evading international law enforcement. It’s interesting that the Belgrade’s police chief, Veselin Milic, who also served as an anti-corruption advisor to Serbian President Aleksandar Vučić, owns an apartment right next to the Ambassador Park where Kwon and Han stayed. Interestingly, the South Korean embassy is merely a six-minute drive from this decade-old residential complex, placing South Korean prosecutors, who were collaborating with Serbian authorities to capture Kwon, unexpectedly close to their target.

Further tightening the net around Kwon, a report from Digital Assets, a South Korean crypto news outlet, revealed  that the IP address and social network accounts linked to Kwon were traced back to the Ambassador Park address. This connection was confirmed by Serbian authorities, indicating just how close Kwon was to being apprehended during his time in Serbia.

Montenegro: Extradition Decision Belongs to Minister, Not Courts

Terraform Labs co-founder Do Kwon’s pending extradition to South Korea has reportedly halted, following a legal challenge issued on Thursday by Montenegro’s top prosecutor.

The Office of the Supreme State Prosecutor in Montenegro said  that the decision by the High Court to extradite Kwon to his native South Korea instead of the United States, along with the appellate court’s confirmation, was conducted through “abbreviated proceedings” that exceeded its jurisdictional boundaries.

According to the statement , only Montenegro’s minister of justice can decide to allow Kwon’s extradition. Interestingly, the statement did not mention Kwon by name. Instead, it simply refers to “a citizen of the Republic of South Korea.”

The Office filed a motion to protect legality with the Supreme Court of Montenegro. This action follows the Court of Appeals’ decision to uphold the lower court’s ruling.

Kwon Not Named

The lower court’s ruling granted the extradition request from South Korea for K.D.H., a South Korean citizen, through an expedited procedure. However, the lower court denied the request for extradition from the United States.

However, the Office can file a motion to protect legality against final judicial decisions and preceding judicial proceedings if the law was violated.

MNE Court Accused of Bypassing Rules, Prosecutor Seeks Review

In this specific case, the court allegedly conducted an expedited procedure instead of the standard one, which is a legal violation. Furthermore, the court may exceed its authority by deciding on the extradition. This is because this falls solely under the jurisdiction of the Minister of Justice.

The motion to protect legality also came about because the Court of Appeals did not hear from the Supreme State Prosecutor during the appeal process. This contradicts the provisions of the Law on International Legal Assistance in Criminal Matters and the Law on the State Prosecutor’s Office. These laws stipulate that only the Supreme State Prosecutor’s Office can represent the prosecution before the Court of Appeals. The failure to hear from the prosecutor allegedly violated criminal procedural rules and potentially impacted the decision’s legality.

The Supreme State Prosecutor’s Office requested the Supreme Court to acknowledge the validity of their motion. It also asked the court issue a judgment that modifies the lower court’s decision.

Crypto Collapse Sparks Do Kwon Extradition Battle

Montenegro found itself unwittingly caught in a tug-of-war between the US and South Korea about a year ago. In 2023 Do Kwon and his colleague, Han Chang-joon, were arrested and detained for attempting to use counterfeit Costa Rican passports en route to Dubai.

Kwon’s arrest occurred six months after Interpol issued a “red notice” for his arrest. This, in turn, came 10 months after the $40 billion collapse of his company, Terraform Labs, and the Terra ecosystem.

Kwon faces criminal charges in both the US and South Korea, but he has been contesting extradition since his arrest, lodging appeals against several court rulings with varying degrees of success. When Montenegro extradited Han to South Korea in February, Kwon seemed destined to follow suit.

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