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Do Kwon’s Extradition: Montenegro Justice Official to Choose U.S. Over Korea for Crypto Tycoon

Last Updated December 8, 2023 1:55 PM
Teuta Franjkovic
Last Updated December 8, 2023 1:55 PM

Key Takeaways

  • Do Kwon is allegedly set to be extradited to the U.S. from Montenegro.
  • The decision was allegedly revealed by Montenegro’s Justice Minister in private meetings.
  • David Lesperance indicated potential charges of fraud related to selling clients on an algorithmic stablecoin.

The ongoing saga involving Do Kwon, co-founder of Terraform Labs, has taken a new turn as Montenegro’s top justice official has allegedly decided on Do Kwon’s extradition.

Following a court in Montenegro approving his extradition to either South Korea or the United States, Do Kwon may end up being extradited to the U.S. 

Do Kwon Faces Extradition to U.S. for Terra Collapse

Montenegro’s top justice official is reportedly considering sending crypto tycoon Do Kwon to the U.S. rather than South Korea to face criminal charges, according to  individuals familiar with the matter.

Kwon, who has been in custody in Montenegro since March, is the subject of an international extradition dispute between the U.S. and South Korea.

Prosecutors from both countries seek to try Kwon for fraud and securities-law violations related to the $40 billion crash of his TerraUSD and Luna cryptocurrencies in May 2022. Despite a Montenegro court approving Kwon’s extradition last month, the final decision rests with Justice Minister Andrej Milovic, who is expected to announce his decision after the resolution of a last-ditch appeal by Kwon against the court ruling.

Similarities to SBF Case

According to a legal crypto expert, David Lesperance, Do Kwon will be charged in many ways similar to Sam Bankman-Fried’s case as opposed to CZ Zhao’s.

“So it’s going to be that he committed fraud, because he was basically selling clients on this algorithm stablecoin, and making false statements to induce people to give to give him money,” Lesperance explained.

“It is similar to what in some ways SBF was doing, which is: hey, if you give me the money I’m not going to use it, whereas he was just stealing it.”

“So what is going to happen is that they’re going to extradite him. I’m pretty sure they’ve got charges already done and sealed. It’s probably a sealed indictment at this point so we’ll know fairly quicklywhat’s what’s going to be done.”

Lesperance also mentioned Daniel Shin, co-founder of TerraformLabs, who recently appeared in court in South Korea  and denied all charges related to the 2022 collapse of the Terra Ecosystem.

Shin instead attributed the situation to his associate Do Kwon’s “unreasonable” management practices of Anchor Protocol. This legal development adds complexity to the ongoing legal issues surrounding TerraformLabs and its co-founders.

He stated Korea probably isn’t happy with the Monetenegrian decision but finds “the Koreans aren’t gonna undermine the case by not allowing Shin to leave should he be called as a witness”.

Legal Woes Mount: CZ Guilty, SBF Indicted, and Do Kwon on the Run

Prominent figures in the crypto industry have faced legal scrutiny in recent months. The U.S. has prosecuted former FTX CEO Sam Bankman-Fried, and more recently, Binance’s Changpeng “CZ” Zhao faced charges for anti-money laundering and sanctions violations. Zhao pleaded guilty, and Binance agreed to pay over $4 billion in fines.

Do Kwon, the co-founder of Terraform Labs, joined the list of crypto titans facing legal challenges. In late 2022, Interpol reportedly issued a red notice  for Kwon as part of a global search following the collapse of the TerraUSD and Luna tokens he created, resulting in a loss of around $40 billion.

If extradited to the U.S., Do Kwon could face at least eight charges, including commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation related to his role at Terraform Labs. The SEC has also accused him of “defrauding investors” in multibillion-dollar crypto schemes.

In South Korea, Kwon is charged with violating capital-markets laws, manipulating transaction volumes using “trader bots,” and bribery.

While prosecutors in South Korea advocate for Kwon to face charges in the country, his impending extradition to the U.S. may lead to a trial there, with U.S. prosecutors likely pursuing vigorous legal action.

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