Former Terraform Labs CEO Do Kwon, co-founder of the algorithmic stablecoin TerraUSD (UST), may be extradited to the U.S., as reported by The Wall Street Journal. Kwon, currently held in Montenegro, faces charges in both the U.S. and South Korea.
Montenegro Justice Minister Andrej Milovic is planning to extradite Kwon to the U.S. amid financial crime charges related to the collapse of TerraUSD and Luna tokens. Kwon, imprisoned in Montenegro since March, had previously agreed to be extradited to South Korea, but Milovic is expected to make the final decision on the destination.
Milovic has not officially announced his decision and might wait for Montenegro’s courts to rule on Kwon’s appeal against the extradition. Kwon’s attempt to appeal was noted, with Milovic quoted as saying the decision will be made public “in a timely manner.”
The collapse of Terraform Labs in May 2022, specifically the depegging of TerraUSD from the U.S. dollar, triggered a $40 billion crypto market crash. Numerous firms, including Celsius and Voyager, faced bankruptcies due to exposure to UST.
Kwon’s case adds to a series of legal actions against cryptocurrency figures globally. Notable cases include the prosecution of former FTX CEO Sam Bankman-Fried and charges against Binance’s Changpeng “CZ” Zhao.
The U.S. Securities and Exchange Commission (SEC) has an open case against Kwon and Terraform Labs, accusing them of offering and selling unregistered securities. The SEC seeks a ruling from Judge Jed Rakoff on whether the tokens were securities, aiming to exclude the decision from a jury.
If extradited to the U.S., Kwon faces eight charges, including commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation. The SEC also charged him with “defrauding investors in crypto schemes.”
The collapse of TerraUSD and Luna tokens, created by Kwon, had significant repercussions, causing widespread losses and bankruptcy filings across the crypto industry.
The decision to extradite Kwon underscores the ongoing jurisdictional battle between the U.S. and South Korea. Both countries have charged Kwon with serious allegations, including fraud and securities-law violations.
Despite the pending extradition decision, legal experts haven’t ruled out potential charges against Kwon in South Korea. Kwon, who denies committing fraud, remains at the centre of attention for U.S. and South Korean authorities.
In the midst of these legal proceedings, Kwon’s immediate concern revolves around the charges brought by U.S. prosecutors.