Do Kwon, the co-founder of Terraform Labs, has been detained in Montenegro while attempting to fly to Dubai allegedly using fake documents.
Montenegrin authorities arrested Kwon at Podgorica airport and have approved a 30-day extension of his detention due to concerns over his unclear identity and potential for escape. In response to this decision, Kwon’s legal representatives have confirmed their intention to appeal the extension.
A wanted fugitive
U.S. regulators accused Kwon and Terraform Labs of “orchestrating a multi-billion dollar crypto asset securities fraud earlier this year.” South Korean authorities issued an arrest warrant for Kwon last September, believing that his company had violated capital market rules.
Law enforcement sent representatives to Belgrade to negotiate when they thought he was in Serbia because the two countries did not have an extradition agreement. Kwon asserted that he was not hiding but never provided an address.
Montenegro’s interior minister Filip Adzic confirmed Kwon’s arrest on Twitter, describing him as “one of the world’s most wanted fugitives” and stating that the suspect was allegedly traveling under a false name with fake documents.
The identification of the man was pending official confirmation, according to the authorities. The suspect in Montenegro was eventually identified as Kwon by South Korean authorities when his fingerprints matched those on file.
Kwon is accused of several crimes, including conspiracy to commit fraud and market manipulation as well as securities fraud, wire fraud, and commodities fraud. U.S. prosecutors have separately charged Kwon with fraud, and an indictment was made public at the U.S. district court in Manhattan.
Montenegro does not have extradition treaties with the U.S. or South Korea, creating challenges in extraditing Kwon.
Regulators come hard on Do Kwon
U.S. financial regulators have accused Kwon and Singapore-based Terraform Labs of failing to provide the public with full, fair, and truthful disclosure about their crypto asset securities, particularly Luna and TerraUSD.
Regulators claim the company repeatedly stated that the tokens would increase in value and misled investors about TerraUSD’s stability.
In May 2022, the value of Luna and its linked TerraUSD cryptocurrency plummeted to near zero, prompting a sell-off in major cryptocurrencies such as bitcoin, ethereum, and tether. Elliptic, a blockchain analytics company, estimates that $42 billion was lost by international investors in terraUSD and luna.
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Following his arrest, local media outlet Vijesti reported that Kwon’s legal representatives filed an appeal against the Montenegrin court’s decision to extend his detention beyond the standard 72 hours.
Prosecutors justified the extension by citing the high possibility of escape. Han Chang-Joon, who was taken into custody with Kwon, asked to make his statement in his native Korean, which caused a delay in the hearings while the court sought a translator.
Founded Serbian company in 2022
The South Korean secretly founded a new company while hiding out in Serbia as a fugitive from the law.
According to a March 27 report from DL News, Do Kwon registered a company in Belgrade on Oct. 12, 2022, under “Codokoj22 d.o.o. Beograd.”
DL News claims it obtained the information from the Serbian business registry.
Although people cannot search the registry by individual names, officials indicated that two South Koreans named Do Kwon and Han Chang-Joon appeared to be listed with a company number.
Per the document from the Serbian business registry, Do Hyuang Kwon is the sole proprietor of the new business and is listed as a director alongside Han Chang-Joon from Chai Corporation.
Kwon reportedly registered the new company as a “consultancy service,” using his Korean passport. The consultancy service description is frequently utilized to cover a diverse range of economic activities, so there’s no telling what exactly Kwon and Han’s intention with the company was.
Lawyers helped Kwon register company
Do Kwon created terraUSD, an algorithmic stablecoin that claimed to be pegged to the USD, and luna, a cryptocurrency that powered the Terra ecosystem.
However, his fortunes changed dramatically in May 2022 when both coins collapsed, triggering a massive sell-off in the crypto market and wiping out billions of dollars from investors.
Since then, Kwon has been on the run from authorities in several countries, including South Korea, the U.S., and Singapore, where his company was based.
He faces charges of fraud, securities violations, and conspiracy for allegedly misleading investors about the stability and profitability of his tokens.
Kwon reportedly managed to set up his new venture and stay away from legal scrutiny while being one of the most wanted men in the world with the help of a network of lawyers.
Per the official documents from the registry, one of the lawyers is Ognjen Colic, a prominent Serbian lawyer and partner at the Belgrade-based Gecic Law Firm, which Kwon contracted to represent him.
Colic reportedly submitted the company’s registration application on behalf of the fugitive.