Do Kwon, the South Korean entrepreneur accused of orchestrating a cryptocurrency collapse that cost investors $40 billion, has been extradited to the United States after a prolonged legal battle. Kwon, the former CEO of Terraform Labs, was behind two cryptocurrencies, TerraUSD and Luna, which crashed spectacularly in May 2022, triggering a broader sell-off in the crypto market.
The US Department of Justice has charged Kwon with multi-billion-dollar crypto asset securities fraud, accusing him of playing a central role in the coins’ failure.
Legal Journey and Arrest in Montenegro
Kwon fled South Korea in 2022 after an arrest warrant was issued and was later detained in Montenegro in March 2023 while attempting to board a flight to Dubai with forged documents. Despite the absence of extradition treaties between Montenegro and the US or South Korea, Montenegrin authorities approved Kwon’s extradition earlier this month, with Kwon reportedly consenting to the process.
His extradition ends an 18-month-long legal saga, which included a conviction in Montenegro for forging travel documents.
The Terraform Collapse and Its Global Impact
Terraform Labs gained fame in 2021 for the meteoric rise of its cryptocurrencies. Luna and its stablecoin TerraUSD attracted a loyal following, with fans dubbing themselves “Lunatics” and calling Kwon their “king.” However, on May 9, 2022, the coins lost over 99% of their value within 48 hours, wiping out billions of dollars in investments.
This catastrophic failure sparked the “cryptocrash”, a panic-driven sell-off that wiped an estimated $400 billion from the global crypto market. Even Bitcoin, the market’s flagship cryptocurrency, was affected.
While the crypto market has since shown signs of recovery—Bitcoin briefly surpassed $100,000 per coin in December—Terraform Labs filed for bankruptcy in the US in January 2024.
Next Steps for Do Kwon
Kwon’s extradition to the US signals the start of what could be a landmark case for cryptocurrency regulation and fraud. The charges against him underscore growing scrutiny of the crypto industry, as global regulators aim to prevent similar market collapses.
