Terraform Labs Founder Do Kwon Arrested and Charged in Montenegro

On March 23, 2023, Do Kwon, the founder of Terraform Labs, was arrested in Montenegro’s capital city airport while attempting to board a plane to Dubai with falsified Costa Rican and Belgium passports. Interpol has confirmed his arrest, and the United States has filed eight counts of criminal charges against Kwon.


Identity Confirmed Through Fingerprint Match

Montenegrin authorities confirmed Kwon’s identity through a fingerprint match with the help of Interpol and South Korean officials. Kwon is wanted in South Korea on charges related to the collapse of his company’s algorithmic stablecoin Terra. The country revoked Kwon’s South Korean passport and sought the help of Interpol in September to arrest the fugitive who fled from his native South Korea to Singapore, then to Dubai, before last being spotted in Serbia back in December.


US SEC Filed Securities Fraud Charges in February

The United States Securities and Exchange Commission (SEC) filed securities fraud charges against Kwon in February. It cited the Anchor Protocol’s 20% interest rate offer on Terra deposits. Now, the US District Court Southern District of New York has charged Kwon with eight counts of criminal acts, including conspiracy to defraud, two counts of commodities fraud, two counts of securities fraud, two counts of wire fraud, and market manipulation.

Kwon Denied Fugitive Status and Called Charges “Politically Motivated”

Kwon has consistently denied that he was a fugitive and claimed charges against him were “politically motivated.” He taunted authorities on Twitter, offering to set up a meeting with law enforcement, writing the words “pew pew.” However, his arrest has now confirmed his status as a fugitive from justice.



Wanted in Multiple Countries

Kwon is now wanted in at least three countries – South Korea, the US, and Singapore. Singapore announced at the start of March that it had opened an investigation into the founder. While Montenegro doesn’t have an extradition treaty with the US or South Korea, both countries are seeking extradition. South Korean authorities previously travelled to Serbia, where Kwon was last spotted, in hopes of negotiating a handover agreement.


Unclear Where Kwon Will End Up

It remains unclear where Kwon will end up. His arrest raises questions about his company’s collapse and the role of algorithmic stablecoins in the cryptocurrency industry.


Recap of Terra’s Collapse

Terra and its counter-coin, LUNA, collapsed in May 2022 after Terra lost its peg to the dollar. The analytics company Elliptic says it wiped out $42 billion in value. The LUNA Foundation Guard’s (LFG) shuffling of the $3.5 billion reserve fund, which it held in bitcoin, was also scrutinised by Elliptic. LFG said it would lend $750 million bitcoin to OTC trading desks to attempt to recover Terra’s target price of $1. The LFG moved its entire bitcoin holdings to Gemini and Finance, but Elliptic couldn’t confirm that LFG used the bitcoin holdings’ value to buy Terra.


The arrest of Do Kwon, the founder of Terraform Labs, marks a significant development in the aftermath of the Terra/LUNA collapse. Kwon’s arrest highlights the seriousness of the allegations against him and the attention that authorities worldwide are paying to cryptocurrency fraud. It also shows the growing cooperation between international law enforcement agencies and the effectiveness of Interpol in tracking down international fugitives.

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