Do Kown, co-founder and former CEO of now-defunct Terraform Labs, Do Kwon, is facing extradition to South Korea and the United States after being arrested trying to leave Montenegro with a fake passport in late March.
The South Korean national is under indictment due to the spectacular collapse of Terra’s algorithmic stablecoin TerraUSD (UST) alongside the platform’s native asset Luna, which saw nearly $40 billion dollars disappear from the cryptocurrency market and sparked fears of contagion across the industry.
South Korean prosecutors are pushing for him to face criminal charges in his home country, claiming it would be best for victims, despite efforts from U.S. authorities for him to be extradited to North America.
How Terra's UST and LUNA Imploded
Decrypting DeFi is Decrypt's DeFi email newsletter. Art: Grant Kempster Amid the craziest week in crypto ever, the collapse of Terra's UST stablecoin and governance token LUNA emerged as the biggest story. Amid the crash, LUNA, formerly a top 10 coin by market cap, fell 100% to fraction of a fraction of a cent, and UST, designed to stay pegged at $1, bottomed out at 13 cents. So what the hell happened? Grab your coffee, you're going to need it. There were several forces at work. The first is the...
In a Wall Street Journal exclusive, Dan Sung-han, head of the South Korean team investigating the crime, said: “Given the nature of this incident, we think investigating the case in South Korea would be the most efficient way of bringing justice” to investors.
According to Sung-han, who is backed by two decades of experience, most of the key evidence and accomplices linked to Do Kwon are based in South Korea. He’s said that the launch and failure of both cryptocurrencies constitute a “systemic crime.”
Do Kwon and his collaborators face charges for fraud, violations of capital-markets laws, using “trader bots” to manipulate transaction volumes, bribery and a series of other financial crimes.
Authorities from the Southeast Asian nation have been investigating individuals involved in the collapse for nearly 10 months, leading up to the recent indictments. If found guilty, Do Kwon would likely face the longest jail term for a financial crime in the country’s history, says Sung-han.
SEC Sues Terraform Labs and Founder Do Kwon For Securities Fraud
The U.S. Securities and Exchange Commission on Thursday charged Singapore-based Terraform Labs and founder and CEO Do Hyeong Kwon—better known as Do Kwon—with securities fraud involving its algorithmic stablecoin Terra USD and the LUNA token. The complaint, filed in the U.S. District Court for the Southern District of New York, charges the defendants with violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act. “We allege that Terraform and Do Kwon failed...
Meanwhile, Kwon faces criminal fraud charges in the United States from both federal prosecutors in New York as well as a civil lawsuit by the Securities and Exchange Commission (SEC).
Lawyers for the former head of Terraform Labs have rejected the charges set forth by the U.S. claiming they don’t have jurisdiction due to the company not marketing directly to Americans, stating neither cryptocurrency was duly regulated by the SEC.
Whether he will be extradited to South Korea or the United States will be resolved once the authorities in Montenegro conclude their case against Kwon for passport fraud.
