Since 2023, the decision regarding the extradition of Terraform Labs co-founder Do Kwon to South Korea or the United States has been hotly contested in Montenegrin courts. On August 1, the Montenegro Appellate Court upheld a previous ruling to extradite Do Kwon to South Korea.
According to a court statement, there is no further motion to appeal the extradition ruling, ensuring that Do Kwon’s repatriation to South Korea will be expedited.
Legal Battles and Extradition Decisions
This recent ruling is likely the final decision in a series of legal battles, appeals, and reversals about whether to extradite Kwon to the United States to face charges or to South Korea, which may be a more favorable jurisdiction for the embattled South Korean native.
Terraform Labs’ Legal Troubles in the United States
In April, a U.S. court found Terraform Labs and its founder, Do Kwon, liable for fraud in a case brought by the U.S. Securities and Exchange Commission (SEC). The April 5 verdict found both Kwon and Terraform Labs liable for six charges, including misleading investors and reckless mishandling of customer funds.
Later, in June, Terraform Labs agreed to a $4.47 billion settlement with the SEC, which included disgorgement fines of approximately $3.6 billion, a $420 million civil penalty, and $467 million in interest payments. The SEC settlement, approved by Judge Rakoff on June 13, also imposed roughly $204 million in legal fines on Kwon.
Following the settlement, Terraform Labs announced it would cease operations on June 12, 2024, and transfer control of the Terra ecosystem to the community.
Connections to Montenegrin Prime Minister Milojko Spajic
In the wake of the legal settlement, Montenegrin news outlet Vijesti reported that current Prime Minister Milojko Spajic was an early investor in Terraform Labs. The outlet claimed Spajic invested $75,000 in 2018 and received 750,000 LUNA tokens just days before Terraform Labs was registered as a business entity in Singapore. Spajic denied these claims, stating that the investment was made by Das Capital SG, a company he worked for prior to taking office.
The Terra-Luna Collapse and Investor Losses
The collapse of TerraUSD (UST), an algorithmic stablecoin, and its sister token, LUNA, led to investor losses exceeding $40 billion. This event triggered legal action against Do Kwon, who fled South Korea. After Kwon was apprehended in Montenegro, both South Korea and the United States filed extradition requests.
Final Ruling on Extradition
The Montenegro Appellate Court’s decision on August 1 to extradite Kwon to South Korea appears to be the final step in this complex legal saga. The ruling is legally binding, although the exact timing of Kwon’s extradition remains unclear.
Kwon was charged in the U.S. with fraud by federal prosecutors in New York over the $40 billion crash of Terraform Labs’ cryptocurrency, which devastated retail investors globally. Kwon and another South Korean were arrested in Montenegro while attempting to travel to Dubai using fake Costa Rican passports. He has served a prison term in Montenegro for using a fake passport.
