Terra Founder Do Kwon’s Extradition Approved by Montenegrin Court – Here’s the Latest

Ruholamin Haqshanas
Last updated: | 2 min read
Image Source: Reuters

A court in Montenegro’s capital, Podgorica, has approved the extradition of Do Kwon, the founder of Terra, to either South Korea or the United States. 

According to a recent update on the judiciary’s website, the final decision on the country of extradition will be taken by the Montenegrin Justice Minister.

However, before the extradition process takes place, Kwon will serve a four-month prison sentence in Montenegro for the crime of document forgery.

Kwon’s arrest took place in March at Podgorica’s airport, where he was apprehended with falsified documents.

Kwon’s legal troubles extend beyond Montenegro. 

In addition to the charges of document falsification, he faces multiple counts of fraud levied by U.S. federal prosecutors. 

US prosecutors have claimed that Kwon made a series of false and misleading statements during a TV interview about the extent to which the Terra blockchain had been adopted by users.

The disgraced crypto boss also made a series of purportedly misleading statements about the effectiveness of the TerraClassicUSD stablecoin to keep its peg with the US dollar, as well as Kwon’s alleged involvement in trading strategies that were designed to alter the market price of assets.

Furthermore, he is also dealing with civil charges in the U.S., as well as an ongoing investigation in South Korea related to the collapse of TerraUSD last year.

Just recently, the Montenegro High Court upheld the four-month prison sentence for Kwon and his associate Han Chang-Joon. 

The court rejected their appeal, deeming the sentence appropriate. After serving his sentence in Montenegro, Kwon faces the possibility of extradition to either South Korea or the U.S.

Terra Co-Founder Indicted in South Korea

In a separate but related development, Daniel Shin, co-founder of Terraform Labs, was indicted in South Korea for violations of capital markets laws. 

Prosecutors have frozen $185 million in assets. 

Shin, however, has denied any involvement in the collapse of the company, stating that he left two years prior to the incident.

Shin is the founder of Chai, which established a business partnership with Terra. 

He has claimed the partnership discontinued in 2020, but a 2022 interview on a YouTube channel showed Shin explaining that Chai products could be “topped up” at Terra “stations” – an indication that the partnership was still live in early 2022. 

The video in question was posted three weeks prior to the Terra ecosystem crash.

Shin maintained that the video and its contents were misinterpreted, and his legal team clarified in a statement to SBS that Shin “has not participated in Terra’s management since parting ways with Kwon” in 2020.

His team further added that the United States Securities and Exchange Commission (SEC) had issued charges against Kwon. 

However, the team noted that charges made no mention of Shin, an indication that the SEC did not think he was connected with fraud or securities-related violations.

Terra’s algorithmic stablecoin TerraUSD used a mix of algorithms and trader incentives involving a sister token, Luna, to maintain its $1 peg.

However, the stablecoin lost its dollar peg in May last year after a wave of sell-offs hit the crypto market.