Do Kwon Released From Montenegrin Prison on Bail; Terraform Labs' Civil Trial Begins in NYC

It remains unclear whether Kwon will eventually be extradited to the U.S. or South Korea to face charges tied to the $40 billion collapse of the Terra ecosystem in 2022.

AccessTimeIconMar 25, 2024 at 3:54 p.m. UTC
Updated Mar 25, 2024 at 3:56 p.m. UTC
  • Do Kwon was released from prison in Montenegro on Saturday pending extradition to either the U.S. or South Korea
  • Kwon has missed the start of a civil fraud trial against him and Terraform Labs that kicked off in Manhattan on Monday

Terraform Labs co-founder Do Kwon has been released from prison in Montenegro as the Balkan country’s Supreme Court weighs competing extradition requests from the U.S. and South Korea.

Both countries want to try Kwon on criminal charges, including fraud, tied to the $40 billion collapse of the Terra ecosystem in May 2022. After the Terra implosion, Kwon spent months on the lam before eventually being arrested in Montenegro for attempting to use fake Costa Rican travel documents en route to Dubai.

Kwon was initially given a four-month sentence for his crime, but remained in Montenegrin prison until his release on Saturday. According to local media reports, Kwon has been released to a shelter for foreigners and has had his real passport confiscated to prevent him from leaving the country. Kwon is expected to ask the court for permission to remain at large in the country until a decision on his extradition is reached, local media reported.

While he was in custody, Kwon and his lawyers fought extradition efforts by challenging court decisions, but his eventual extradition to South Korea seemed certain earlier this month when an appellate court confirmed a lower court’s decision to send him back to his native country to face charges.

That decision was upended last week, when Montenegro’s top prosecutor intervened and asked the country’s Supreme Court to overrule the decision and stay Kwon’s extradition. The Supreme Court complied and is currently weighing the two competing requests. No timeline on a decision has been given.

Civil fraud trial kicks off in New York

Kwon’s extended stay in Montenegro has not stopped the cases against him from moving forward.

A civil fraud trial brought by the U.S. Securities and Exchange Commission (SEC) against Kwon and Terraform Labs kicked off in New York on Monday. The SEC has accused Kwon and Terraform Labs of lying to investors about the stability of Terra, their “algorithmic stablecoin,” and deceiving investors about the integration of the Terra blockchain into a Korean mobile payment app.

Kwon also faces criminal charges in New York, as well as in South Korea.


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Cheyenne Ligon

Cheyenne Ligon is a CoinDesk news reporter with a focus on crypto regulation and policy. She has no significant crypto holdings.