Do Kwon, the co-founder of Terraform Labs and the creator of the collapsed TerraUSD stablecoin, has his detention in Montenegro extended until Feb. 15, 2024.
According to Bloomberg, the U.S. and South Korea pursue his extradition on fraud and other charges.
Do Kwon’s Detention Extended by Two Months
Do Kwon’s detention in the small European nation was scheduled to end this coming Friday, but a court in Podgorica decided to extend it by two months following a request from the U.S. and South Korea, a court spokeswoman told Bloomberg.
The court’s decision comes as both countries aim to prosecute the crypto entrepreneur on charges related to the collapse of the TerraUSD stablecoin, which triggered a multibillion-dollar selloff in the crypto market in May 2022.
Do Kwon and his associate Han Chang-Joon were arrested in Montenegro in March 2022 while trying to board a flight to Dubai with forged passports. They were sentenced to four months in prison for document falsification in June 2022.
Do Kwon’s Extradition Approved by Montenegro Court
Last week, The Wall Street Journal reported that Montenegro planned to extradite Do Kwon to the U.S., citing anonymous sources familiar with the discussions by Justice Minister Andrej Milovic.
However, according to Bloomberg, Montenegro’s high court has ruled that Do Kwon could be extradited to either the U.S. or South Korea. Do Kwon is currently appealing that decision.
Montenegro does not have extradition treaties with the U.S. or South Korea, but it has agreed to cooperate with Interpol, the international police organization, which reportedly issued a so-called red notice for Do Kwon in 2022.
Do Kwon’s Role in the TerraUSD Collapse
Do Kwon became the target of a global manhunt in 2022 after the implosion of the two tokens he created, TerraUSD and Luna. The tokens lost their value in a matter of days in May 2022, wiping out about $40 billion.
TerraUSD was supposed to be a stablecoin, a type of cryptocurrency that maintains a fixed value, typically pegged to the U.S. dollar. However, TerraUSD was not backed by dollar reserves but by an algorithm that created and destroyed TerraUSD and Luna tokens to keep the price stable.
This approach failed when the demand for TerraUSD plummeted, causing a downward spiral that dragged down the value of Luna and other cryptocurrencies.
Do Kwon has been charged in the U.S. with securities fraud, wire fraud, commodities fraud, and conspiracy, according to an indictment made public by the U.S. District Court in Manhattan in November 2022.
According to recent reports, he is also wanted in South Korea for fraudulent, unfair trading and fraud. Do Kwon has denied any wrongdoing and claimed that he was not in hiding but did not reveal his location.
