Terraform co-founder Do Kwon to stay in Montenegro

abdelaziz Fathi

The Montenegro Court of Appeals has once again revoked the extradition of Do Kwon, co-founder of Terraform Labs, to South Korea or the United States.

Terraform founder Do Kwon

This decision follows an appeal by Kwon’s defense attorneys, marking the second time the court has overturned the extradition decision initially made by the country’s High Court in December.

The legal proceedings against Kwon have been ongoing since last year. In December, an appeals court in Montenegro overturned an earlier decision to extradite Kwon to South Korea and the U.S. The SEC charged Terraform Labs and Kwon in February over the collapse of TerraUSD and Luna in May 2022, which led to the loss of $40 billion in investor wealth. South Korean prosecutors have levied similar charges against Kwon and Terra affiliates.

Do Kwon successfully appealed a prior extradition decision on December 14, challenging the High Court’s November 17 ruling that deemed the extradition requests legally valid. Following a reaffirmation of the extradition’s validity by the High Court on December 29, Kwon’s defense re-appealed in January.

The Appeals Court identified procedural flaws in the extradition request handling, notably the ambiguous order of arrival of the requests from South Korea and the U.S., as well as the High Court’s failure to provide clear reasons and facts in its decision.

The case is now set to be returned to the first-instance court for reevaluation.

Kwon’s extradition is sought in connection to charges of financial crimes in both the U.S. and South Korea following the collapse of the Terra ecosystem in May 2022, which resulted in billions of dollars in losses.

After being arrested in Montenegro in March for using a fake passport, Kwon was initially released on bail set at $436,000 in May, pending trial. In June, he received a four-month prison sentence for document forgery, a decision he appealed and lost, leading to his sentencing in November.

The search for Kwon intensified globally in September 2022 after Interpol issued a red notice in response to the TerraUSD and Luna collapse, which erased $40 billion in investor wealth.

On a related note, Do Kwon’s former colleague, ex-CFO of Terraform Labs Han Chang-joon, was extradited from Montenegro to South Korea earlier this week. This follows the completion of his four-month prison sentence in Montenegro for attempting to travel with forged documents.

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