Former Terraform Labs CEO Do Kwon may soon be extradited to the US or South Korea following a ruling from the Montenegrin High Court. Kwon has agreed to be deported to South Korea, but the final decision lies with Justice Minister Andrej Milovic.
While it is unclear where Do Kwon will face charges after serving prison time for forgery in Montenegro, the minister hinted that the region intends to sign an extradition agreement with the US, its chief foreign policy partner. Kwon is also wanted in South Korea for violation of capital markets law.
Kwon Prefers South Korea to US
Kwon’s lawyers have previously contested the legitimacy of allegations leveled by US authorities. They added recently that Kwon was willing to be extradited to South Korea.
Kwon appeared to have vanished after the collapse of stablecoin TerraUSD (UST) and its sister coin Luna (LUNA) in May last year. UST was a stablecoin that maintained a value of one US dollar through software controlling the minting and burning of LUNA.
Read more: What Is a Stablecoin? A Beginner’s Guide
The algorithm failed after a series of large UST withdrawals from a stablecoin pool. The minting and burning mechanism had no circuit breaker and eventually tanked the price of both coins to near zero. Korean authorities argue the software never worked at all because the algorithm was too difficult to get right.
How TerraUSD Price Collapsed. Source: Chainalysis
The authorities later requested that Interpol issue a Red Notice to apprehend Kwon in September last year. He was later caught with fake passports at an airport in Montenegro and arrested. He will serve out his four-month sentence there before his extradition.
Crypto CEOs in Front of Firing Squad
If convicted, Kwon would become the third crypto CEO found guilty of financial crimes since the Terra collapse. This week, former Binance CEO Changpeng Zhao pleaded guilty to being involved in violating money laundering and sanctions laws. His plea deal could see him face up to 18 months in prison.
On Nov. 2, a jury found former FTX CEO Sam Bankman-Fried guilty of money laundering and fraud. He faces up to 110 years in prison, although a judge could offer him leniency. His sentencing trial is in March.
Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell
The spate of illegal crypto activity has seen regions like Hong Kong and South Korea develop laws to protect investors. Singapore, where Kwon was living before TerraUSD collapsed, has also made notable strides toward regulations that protect retail crypto clients.
