The legal brawl in Montenegro over Terraform Labs co-founder Do Kwon isn’t over just yet.
Lawyers filed an appeal Tuesday on behalf of Kwon, pushing back against a decision from the High Court of Podgorica. The decision found that conditions had been met earlier this month for Kwon’s extradition—to either the U.S. or South Korea—on charges related to Terra’s collapse.
In the appeal, Kwon’s lawyers asserted that laws on legal assistance from other countries in Montenegro had been “interpreted in a bizarre manner,” according to the local publication Vijesti. Kwon’s lawyers also accused the country’s High Court and Supreme Court of applying the interpretation to his case “in an attempt to satisfy the wishes of the Minister of Justice.”
Montenegro’s Minister of Justice, Andrej Milović, was reportedly left to decide Kwon’s extradition after a previous court decision was reversed this month. Facing criminal charges in the U.S. and South Korea, both countries seek to prosecute Kwon in their respective regions for fraud and violations of capital market rules.
The allegations levied Tuesday represent a new wrinkle in the months-long back-and-forth between Kwon’s lawyers and the Montenegrin legal system. Once settled, Kwon could be extradited to the U.S. or his home country to face criminal charges stemming from Terra’s collapse in 2022, which rattled crypto markets amid billions of dollars of losses.
A ruling granting Kwon’s extradition to South Korea was annulled last month after an appellate court found “significant violations of the provisions of criminal procedure.” That decision effectively sent Kwon’s case back for a retrial, where his extradition was approved again.
Before that, Kwon had successfully appealed a decision granting his extradition to the U.S. for the second time. The ruling found that South Korean officials had requested Kwon’s extradition first—not the United States.
In the U.S., Kwon and Terraform Labs were found liable for fraud this month. Brought by the Securities and Exchange Commission, a Manhattan jury was convinced of charges that Kwon and Terraform Labs made misrepresentations about the success and stability of Terra.
Known for the collapse of its algorithmic TerraUSD stablecoin, Terra’s unraveling triggered more than $40 billion in losses for investors in spring 2022. Unlike most stablecoins, TerraUSD maintained a peg to the dollar using trading incentives, as opposed to being backed by assets.
U.S. regulators alleged that Terraform Labs and Kwon hid assistance from an institutional investor, Jump Trading, after TerraUSD deppeged previously in 2021. On top of that, a jury found that Kwon and Terraform Labs misrepresented Terra’s integration with the South Korean payments app Chai.
Kwon was arrested in Montenegro's capital last March, detained at Podgorica Airport alongside Terra’s former CFO Hang Chang-joon while in possession of a falsified passport. Han has since been extradited to South Korea, but Kwon’s fate remains in limbo as the legal tumult plays out.
Edited by Andrew Hayward