Home Editor's Pick Do Kwon Released from Montenegrin Prison as Supreme Court Deliberates Extradition

Do Kwon Released from Montenegrin Prison as Supreme Court Deliberates Extradition

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Do Kwon, the embattled co-founder of Terraform Labs, has been released from prison in Montenegro as the country’s Supreme Court weighs competing extradition requests from the United States and South Korea.

Kwon, who faces fraud allegations in both countries stemming from the collapse of the Terra ecosystem in 2022, had been in custody since his arrest in March 2023 for attempting to use fake Costa Rican travel documents en route to Dubai.

TLDR

Do Kwon, the co-founder of Terraform Labs, has been released from prison in Montenegro as the Supreme Court deliberates on extradition requests from the United States and South Korea.
Kwon faces fraud allegations in both countries stemming from the collapse of the Terra ecosystem, which resulted in the loss of approximately $60 billion in market value in 2022.
The decision to release Kwon came from the Council of the Supreme Court, which is set to review a decision that could grant or deny extradition to his native South Korea.
Kwon’s passport has been confiscated to prevent him from leaving Montenegro, and he is expected to ask the court for permission to remain at large until a decision on his extradition is reached.
A civil fraud trial brought by the U.S. Securities and Exchange Commission (SEC) against Kwon and Terraform Labs has kicked off in New York, with the SEC accusing them of lying to investors about the stability of the TerraUSD stablecoin and deceiving investors about the integration of the Terra blockchain into a Korean mobile payment app.

The decision to release Kwon came from the Council of the Supreme Court, which is set to review a decision that could grant or deny extradition to his native South Korea. Initially, an appellate court had confirmed a lower court’s decision to send Kwon back to South Korea to face charges.

However, last week, Montenegro’s top prosecutor intervened and asked the Supreme Court to overrule the decision and stay Kwon’s extradition, which the court complied with.

Kwon’s release from prison comes with certain conditions. His passport has been confiscated to prevent him from leaving Montenegro, and he has been relocated to a shelter for foreigners. According to local media reports, Kwon is expected to ask the court for permission to remain at large in the country until a decision on his extradition is reached.

???? Is Prison Crypto’s New Glow-Up? Post-Incarceration Do Kwon and SBF Are Admired

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— Laura Shin (@laurashin) March 25, 2024

The collapse of the Terra ecosystem, which included the TerraUSD algorithmic stablecoin and the Luna token, resulted in the loss of approximately $60 billion in market value in May 2022. The incident sent shockwaves through the cryptocurrency industry and led to several companies filing for bankruptcy in the aftermath.

Both the United States and South Korea are seeking to prosecute Kwon for his alleged role in the Terra collapse. In the U.S., federal prosecutors have charged Kwon with fraud and are seeking his extradition to face trial. Meanwhile, South Korean authorities have also filed criminal charges against Kwon.

Despite his ongoing legal battles, Kwon’s extended stay in Montenegro has not stopped the cases against him from moving forward. On Monday, a civil fraud trial brought by the U.S. Securities and Exchange Commission (SEC) against Kwon and Terraform Labs kicked off in New York.

The SEC has accused Kwon and Terraform Labs of lying to investors about the stability of TerraUSD, which was designed to maintain a value of $1, and deceiving investors about the integration of the Terra blockchain into a popular Korean mobile payment app called Chai.

During the trial’s opening statements, SEC attorney Devon Staren argued that “Terra was a fraud, a house of cards, and when it collapsed, investors lost nearly everything.” Terraform Labs’ attorney Louis Pellegrino countered that the SEC’s case relies on cherry-picked evidence and the testimony of witnesses hoping for whistleblower payouts if the regulator wins.

Kwon, who will not attend the trial in person, has maintained his innocence throughout the legal proceedings. His attorney, David Patton, stated that Kwon never represented Terra’s cryptocurrency as risk-free and that “failure doesn’t equal fraud.”

The outcome of the SEC’s civil fraud trial, as well as the ongoing criminal cases against Kwon in the U.S. and South Korea, could have significant implications for the cryptocurrency industry as a whole. The Terra collapse has already led to increased scrutiny and calls for stricter regulation of stablecoins and other digital assets.

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