Terra’s Do Kwon to be extradited to South Korea instead of US, Montenegro court rules

MONTENEGRO’S High Court mentioned former cryptocurrency mogul Do Kwon ought to be handed over to his native South Korea quite than the US for prosecution over the US$40 billion collapse of the TerraUSD stable-coin in 2022.

It’s the most recent twist within the authorized journey for the Terraform Labs co-founder, who was a fugitive from South Korean expenses for months earlier than he was arrested in Montenegro in March 2023 for touring on a faux passport. Kwon’s arrest set off dueling extradition requests by prosecutors in Seoul and New York. 

The ruling is a win for Kwon, whose legal professionals have expressed a choice for him to go to South Korea. Penalties for white-collar crimes are decrease there than within the US.

Kwon’s fellow former crypto mogul Sam Bankman-Fried is now going through probably a long time in jail after he was convicted of fraud in New York in November. The FTX co-founder was prosecuted by the Manhattan US legal professional’s workplace, which additionally indicted Kwon on fraud expenses.

A spokesman for that workplace declined to touch upon Thursday.

But it’s unclear if this ruling is the ultimate phrase. The Montenegrin courtroom final month ordered that Kwon be despatched to the US, a choice that was overturned this week.

Court spokeswoman Marija Rakovic mentioned Kwon might be extradited quickly except prosecutors attraction. Goran Rodic, a lawyer for Kwon within the Montenegrin capital of Podgorica, mentioned extradition may proceed after Kwon completed serving his sentence on the passport expenses later this month. 

On the opposite hand, the geopolitical scenario going through the tiny Balkan nation, a Nato member, favour extradition to the US, and it’s attainable the federal government is considering measures to make sure that occurs.

Terraform chief monetary officer Han Chang-joon, who was arrested with Kwon in Montenegro, was extradited to South Korea final month.

The collapse of Terra was a seismic occasion within the crypto markets, and set off a downturn that went on to engulf different gamers like FTX.

Meant to maintain a relentless worth of US$1 by way of a fancy mixture of algorithms and dealer incentives involving its free-floating sister token Luna, Terra was designed as a refuge from the volatility of different cryptocurrencies. But each Luna and Terra unravelled when confidence in Kwon’s mission evaporated throughout a couple of chaotic days in early May 2022.

Losses from Terra’s collapse brought on a public outcry in South Korea, the place Kwon was charged breaching capital markets legislation a couple of months later. Manhattan federal prosecutors didn’t file their expenses in opposition to Kwon till after his arrest. According to their indictment, he misled traders concerning the blockchain expertise behind Terra. 

Even if Kwon is extradited to South Korea, the federal government there may nonetheless attain a deal to have him tried in New York first. The US may argue that it has a stronger capacity to grab Kwon’s property around the globe and comply with share them with South Korea. 

In the 1MDB case, Malaysia launched ex-Goldman Sachs Group Inc. banker Roger Ng from custody so he might be prosecuted — and sentenced — in New York first.

Despite receiving a 10-year jail time period, Ng is presently free in Malaysia helping in that nation’s investigation into the looting of the sovereign wealth fund.

Kwon and Terraform are additionally going through a US Securities and Exchange Commission lawsuit over Terra’s collapse.

Such civil circumstances are sometimes placed on maintain whereas prosecutions go ahead, however with Kwon’s extradition nonetheless unsure, the SEC swimsuit goes to trial in Manhattan federal courtroom on the finish of the month. Unlike in a legal trial, Kwon’s presence within the courtroom isn’t required. BLOOMBERG