Terra founder and CFO sentenced to 4 months in Montenegrin jail
Do Kwon, the crypto entrepreneur and former CEO of Terraform Labs, has been handed a four-month prison sentence by a court in Montenegro for allegedly using a false passport.
Han Chong-joon, Kwon’s associate and Terra’s former finance officer, faced similar charges of fabricating official documents and was sentenced to the same four-month prison term. The Montenegro Basic Court stated on its website that the duration of their pretrial detention would be considered in the sentencing process.
Do Kwon, who is currently facing allegations of multibillion-dollar fraud in the United States and is also wanted by South Korean authorities on similar charges, was apprehended in March. The arrest occurred at the airport in Podgorica, the capital of Montenegro, as he was attempting to board a flight to Dubai. As it happens, he was then taken into custody on suspicion of his identity by local police.
During his court appearance in Montenegro, LUNA co-founder claimed to be unaware of the alleged forgery and attributed the responsibility to a Chinese agency. He argued that he was holding a Costa Rican “golden passport,” which is a legitimate document that wealthy individuals could obtain to expedite citizenship in specific nations. Nonetheless, the court dismissed this explanation and proceeded to hand down the prison sentences.
Earlier in May, a court in Montenegro granted bail to Do Kwon, but wo weeks later, the country’s high court overrode the decision that would release the detained Terra Labs founder.
Nevertheless, the Montenegrin court ruled on June 2 that the appeal made by the State Prosecutor’s Office against the earlier bail agreement would not be upheld. As a result, both Do Kwon and Terraform Labs’ chief financial officer Han Chang-Joon were to await further legal proceedings while under house arrest in Montenegro.
The South Korean cryptocurrency entrepreneur was released on a €400,000 ($436,000) bail while awaiting trial for local charges.
Both US and South Korean officials are seeking to extradite Terraform Labs CEO Do Kwon. Prosecutors in New York charged the 31-year-old entrepreneur with eight criminal indictments for defrauding American investors who purchased Terra USD and Luna.
Also in February, the US Securities and Exchange Commission accused Do Kwon with fraud, alleging that he orchestrated a multibillion-dollar crypto asset securities fraud. The SEC alleges that Kwon marketed the so-called “algorithmic stablecoin” TerraUSD and a series of inter-connected digital assets as profit-bearing securities, claiming that the tokens would increase in value.
Globally, investors in TerraUSD and Luna lost an estimated $42 billion. Worse still, the meltdown has shaken confidence in the broader cryptocurrency industry and led to the failure of several major crypto companies including crypto lender Celsius and crypto fund manager Three Arrows Capital.