Montenegro’s Justice Ministry has announced the extradition of South Korean cryptocurrency specialist Do Kwon to the United States. The crypto entrepreneur, also wanted by South Korea, is linked to the collapse of Terraform Labs, a company he founded, which resulted in a $40 billion loss for investors and sent shockwaves through global crypto markets.
The Minister of Justice, Bojan Bozovic, approved the extradition, stating that the legal criteria predominantly favored the U.S. request. This decision follows a year and a half of legal proceedings and reversals over the extradition of Kwon, who was arrested in March 2023 at Podgorica Airport, attempting to travel to Dubai with a fake Costa Rican passport.
Kwon’s Run from Justice
Do Kwon fled South Korea before the May 2022 crash of Terraform Labs’ cryptocurrency TerraUSD and its sister token Luna, both marketed as “stablecoins.” Despite promising stability, the tokens collapsed in a “death spiral,” wiping out billions in investments. Media in South Korea once hailed Kwon as a “genius,” but experts now describe the project as a glorified Ponzi scheme that left many investors bankrupt.
After the company declared bankruptcy, Kwon evaded authorities for months, moving between Singapore and other countries. Terraform Labs filed for bankruptcy protection in the U.S. earlier this year, seeking to navigate ongoing legal battles.
Montenegrin Legal Process
The Montenegrin Constitutional Court recently cleared the way for Kwon’s extradition, confirming that the proceedings respected his right to a fair trial. The court emphasized that Kwon personally consented to expedited extradition to both the U.S. and South Korea during his hearing.
Earlier this year, Montenegro deported Kwon’s business partner, identified as JCH, to South Korea.
Terraform Labs and Regulatory Fallout
Terraform Labs had marketed TerraUSD as a “stablecoin” tied to assets like the U.S. dollar to prevent volatility. The promise of high returns drew billions in investments. However, the collapse of TerraUSD and Luna in May 2022 undermined investor confidence in cryptocurrencies and highlighted regulatory gaps in the industry.
The downfall of Terraform Labs is among a series of crypto scandals, including the high-profile collapse of FTX, which have prompted increased scrutiny of digital currencies worldwide.
