Terraform Labs founder Do Kwon is wanted in South Korea and the US for a scheme that lost investors $40 billion when the company's cryptocurrency plummeted last year — but, for now, he will sit in a Montenegrin prison. Kwon has been found guilty on charges of forging official documents and sentenced to four months in jail after a late March arrest while trying to board a flight to Dubai from Podgorica Airport with fake Costa Rican passports, local newspaper Vijesti reported. Han Chang-joon, Terraform Labs' former finance officer, was also charged and sentenced on the same count. The pair were also found to have forged Belgian passports in their luggage, as well as computers sought by both the South Korean and US authorities.
Kwon and his associates marketed TerraUSD and Luna as stablecoins pegged to the US dollar, purportedly giving them more, well, stability. They collapsed in May 2022 and took many of their investors' life savings along with them, with these individuals subsequently filing complaints that Kwon had run a Ponzi scheme. South Korea first announced an arrest warrant against Kwon and five associates last September, but he, his family and some of Terraform Labs' finance employees had already fled to Singapore, where the company had registered. Interpol soon put Kwon on the "red notice" list at the request of Korean authorities, signaling law enforcement worldwide to arrest him. Montenegrin authorities cited this as another reason for arresting Kwon.
The US Securities and Exchange Commission charged Kwon in February with failing to "provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors." The US District Court in Manhattan publicly released an indictment against Kwon with eight counts, including securities fraud and conspiracy, following his arrest.
Though Montenegro doesn't have extradition treaties with the US or South Korea, the idea is still on the table. The four-month jail sentence comes shortly after Montenegrin authorities increased their custody stay by six months while determining if and how to proceed with the two nation's extradition requests.