Terra’s Do Kwon Caught in Jurisdictional Battle Between US and South Korea

By Pedro Solimano

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.

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.

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.

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