Highlights:
- Montenegro’s decision on Do Kwon’s extradition will conclude a long legal process.
- South Korea and the US are vying to prosecute Do Kwon for the Terra ecosystem’s collapse.
- The extradition ruling could establish a precedent for future cross-border crypto fraud cases.
Montenegro’s Justice Minister Bojan Božović has confirmed that a decision on Do Kwon’s extradition will be finalized by Sunday, October 19. On October 17, the authorities prepared the necessary documents and could sign them by the end of this week.
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However, he did not disclose which country would receive Kwon. Moreover, South Korea and the United States have each made a formal extradition request to prosecute Kwon for his role in the collapse of the Terra ecosystem.
Extradition process for Terraform’s Do Kwon to be signed by this week’s end
Montenegro's Justice Minister Bojan Božović confirmed that a decision has been made regarding the extradition of Do Kwon, the co-founder of bankrupt Terraform Labs, according to CryptoSlate which cited…
— CoinNess Global (@CoinnessGL) October 18, 2024
Montenegro’s Supreme Court ruled in September 2023 that Kwon was eligible for extradition but did not state the country that would take custody of him. The Justice Minister was left with that responsibility. However, he admitted the decision was tough, but it would be decided soon.
Legal Troubles Began After Terra’s Collapse in 2022
Legal issues began in May 2022 when the TerraUSD, a stablecoin that Do Kwon co-founded, lost its peg to the U.S. dollar. The crash wiped out billions in investor funds after this devaluation. The losses were great, estimated to be close to $40 billion.
The damage to investors worldwide was severe, and criminal investigations were launched in South Korea, the United States, and other countries. They accused Kwon of fraud and responsibility for the financial disaster.
Kwon evaded law enforcement for months after the collapse, allegedly living in Serbia. However, authorities arrested Kwon at Podgorica airport in Montenegro in March 2023 after he attempted to leave using fake travel documents. The court convicted Kwon of forgery and sentenced him to six months in prison.
Despite having served his sentence, he continues to stay in custody as the extradition process continues. Authorities arrested Kwon and Chang-Joon, the CFO of Terraform Labs. Earlier this year in 2024, he was extradited to South Korea after his sentence. In related news, Terraform Labs was allowed to wind down under Chapter 11 bankruptcy after settling with the SEC last month. The company settled for $4.47 billion over fraud allegations.
Terraform Labs has been approved to wind down its operations through bankruptcy after settling with the U.S. Securities and Exchange Commission (SEC) for $4.47 billion, following a fraud case where investors lost an estimated $40 billion due to the collapse of TerraUSD and Luna…
— Vanquish Adept (@VanquishAdept) September 22, 2024
South Korea and the U.S. Compete for Extradition
The extradition process has been long and complex. Both South Korea and the United States want to prosecute Kwon. South Korean authorities have charged him with fraud, accusing him of misleading investors. If Kwon is sent there, he will continue with ongoing legal proceedings there. Although penalties for financial crimes can be strict in South Korea, some believe it may be less severe in comparison to some other countries.
On the other hand, the U.S. has put in a lot of hard work to secure Kwon’s extradition. U.S. prosecutors accuse him of securities fraud and serious charges. He is accused of misleading investors and violating securities laws. Kwon could get harsher penalties if prosecuted in the U.S. and serve a long prison sentence.
Implications for Crypto Fraud Investigations
Both South Korean and U.S. authorities see prosecuting Kwon as essential. They view it as a critical step in addressing the consequences of Terra’s collapse. South Korea and the U.S. are both trying to show they are committed to preventing financial misconduct. The resolution of Kwon’s case will set a precedent for future cross-border crypto fraud cases.
The crypto industry has already seen increased regulatory scrutiny following Terra’s collapse. To prevent similar incidents, international regulators have tightened oversight. Kwon’s extradition might give those affected a chance to get justice. However, it could also complicate ongoing investigations.
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