Montenegro Hands Over Terraform Labs Co-Founder Do Kwon to the United States

Montenegro's Minister of Justice, Bojan Božović, signed the order for the extradition of Do Kwon, co-founder of Terraform Labs, to the United States.

Montenegro has decided to extradite Terraform Labs co-founder Do Kwon to the United States, following a lengthy legal battle over his extradition.

The decision was announced by the Montenegrin Ministry of Justice on Friday, after the Constitutional Court rejected Kwon’s appeal against an earlier Supreme Court ruling.

The Supreme Court had ruled in September that the transfer of Kwon to South Korea should be annulled, leaving the final decision on extradition to the Minister of Justice.

Several evaluation criteria were considered in making the decision, including:

– The nature of the offenses for which extradition is sought

– The severity of the punishment that may be imposed for the offenses

– The possibility that the person will be subjected to torture or other cruel, inhuman or degrading treatment or punishment in the requesting country

– The presence of any other factors that would make extradition unjust or oppressive

The ministry’s press release did not specify which criteria were ultimately decisive in Kwon’s case.

However, the decision is likely to be influenced by the severity of the charges against Kwon in the United States, where he could face decades in prison if convicted.

The collapse of TerraUSD and the Moon

In 2022, the collapse of the stablecoin TerraUSD (UST) and the cryptocurrency Luna, both created by Terraform Labs and founded by Do Kwon, caused huge losses amounting to billions of dollars.

UST, designed to maintain a stable value of USD 1, depended on an algorithm that used Luna as collateral. When confidence in UST collapsed, the system started issuing too much Luna, causing it to depreciate and the value of both currencies to plummet.

The failure led to huge losses for investors and investigations on Do Kwon for fraud. The incident raised concerns about the stability of algorithmic stablecoins and prompted authorities in South Korea, the US and Interpol to issue an arrest warrant against him.

Kwon was arrested in Montenegro in March last year for travelling with forged travel documents. He was later released from prison in March this year, but remained stuck in judicial limbo while the Montenegrin courts decided between the US and South Korean extradition requests.

Kwon’s lawyers had requested that extradition be directed to South Korea, where Kwon could face a maximum sentence of 30-40 years for financial crimes.

In the US, however, the judicial system allows consecutive sentences for each crime committed, significantly increasing the potential prison time.

The case had political repercussions in Montenegro. The former Minister of Justice, Andrej Milovic, accused Prime Minister Milojko Spajić of favouring extradition to South Korea because of alleged financial links with Do Kwon.