US Prosecutors to Appeal Montenegrin Court’s Decision to Extradite Do Kown to South Korea

US prosecutors aim to appeal the Montenegrin High Court’s decision to extradite former cryptocurrency mogul Do Kwon to South Korea to face charges related to the $40 billion collapse of the TerraUSD stablecoin in 2022.

The US Justice Department stated on Thursday that it will continue to seek Kwon’s extradition in accordance with relevant international agreements, bilateral agreements, and Montenegrin law, according to a Bloomberg report. 

“The United States appreciates the cooperation of the Montenegrin authorities in ensuring that all individuals are subject to the rule of law,” the authorities wrote. 

Do Kwon Remain in Custody in Montenegro

Do Kwon, co-founder of Terraform Labs Pte, was arrested in Montenegro in March 2023 for using a fake passport. 

Kwon’s arrest triggered competing extradition requests from prosecutors in Seoul and New York.

While the court ruling may be viewed as a victory for Kwon, as his lawyers have expressed a preference for him to be extradited to South Korea, some legal experts in the crypto industry have raised doubts about the decision. 

Terrence Yang, a managing director at Swan Bitcoin and former counsel at Merrill Lynch, called the ruling “a travesty” and questioned the wisdom of sending Kwon to South Korea. 

“The US probably has the largest number of victims by both number and dollar amount,” Yang said.

“It seems a bit ridiculous for the Montenegro court to extradite Do Kwon to South Korea, where he might get acquitted or a comically light sentence as opposed to the United States.”

The SEC has been pursuing a civil case against Terraform Labs and Kwon, linking their operations to an alleged $40 billion cryptocurrency fraud.

Previously, the SEC agreed to postpone Kwon’s trial to mid-March due to Kwon’s extradition request.

Kwon’s legal team filed an appeal against the Montenegro High Court’s decision to uphold the extradition requests from both the United States and South Korea.

Moreover, Do Kwon’s legal representative in Montenegro Goran Rodic has presented an argument favoring Kwon’s extradition to South Korea over the United States.

Terraform Labs Files for Bankruptcy

Terraform Labs filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on January 21, citing estimated assets and liabilities between $100 million and $500 million.

The company later said that the bankruptcy protection filing would enable the pursuit of an appeal against the SEC’s securities fraud lawsuit.

In a filing, Terraform Labs CEO Chris Amani emphasized the importance of bankruptcy protection for the company’s operations and the preservation of value for stakeholders, including the Terra community.

“[The bankruptcy protection] is critical to the Debtor’s ability to operate as a going concern, preserve value for its creditors and stakeholders (including the Terra community), provide an orderly process for resolving competing claims against it, and pursue an appeal of the SEC Enforcement Action.”