Do Kwon, co-founder of Terraform Labs, was arrested in Montenegro while trying to fly to Dubai allegedly using false documents.
Montenegrin authorities arrested Kwon at the Podgorica airport and approved a 30-day extension of his detention due to concerns about his unclear identity and possible flight. In response to this decision, Kwon’s legal representatives have confirmed their intention to appeal the extension.
a wanted fugitive
US 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 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 claimed 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 and false documents.
The man’s identification was pending official confirmation, according to authorities. The suspect in Montenegro was eventually identified as Kwon by South Korean authorities when his fingerprints matched those on record.
Kwon is charged with various crimes, including conspiracy to commit fraud and market manipulation, as well as securities fraud, wire fraud and commodity fraud. US prosecutors separately charged Kwon with fraud, and an indictment was unsealed in US District Court in Manhattan.
Montenegro has no extradition treaties with the US or South Korea, creating challenges in extraditing Kwon.
Regulators are hard on Do Kwon
US financial regulators have accused Kwon and Singapore-based Terraform Labs of failing to provide full, fair and truthful disclosure to the public about their crypto asset holdings, notably Luna and TerraUSD.
The regulators claim that the company repeatedly stated that the tokens would increase in value and misled investors about the stability of TerraUSD.
In May 2022, the value of Luna and its linked TerraUSD cryptocurrency plummeted to near zero, triggering a sell-off in major cryptocurrencies such as bitcoin, ethereum, and tether. Elliptic, a blockchain analytics firm, estimates that international investors lost $42 billion on terraUSD and luna.
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After his arrest, the local media outlet News 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 citing the high possibility of escape. Han Chang-Joon, who was detained with Kwon, asked him to give his statement in his native Korean, causing the hearings to be delayed while the court searched for a translator.
Serbian company founded 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 October 12, 2022, under “Codokoj22 doo Beograd”.
DL News claims that it obtained the information from the Serbian company registry.
Although people can’t search the registry by individual names, officials said two South Koreans named Do Kwon and Han Chang-Joon appeared to be listed with a company number.
According to the Serbian business registry document, Do Hyuang Kwon is the sole owner of the new business and is listed as a director along with Han Chang-Joon of Chai Corporation.
Kwon reportedly registered the new company as a “consulting service,” using his korean passport. The description of the consulting service is often used to cover a wide range of economic activities, so it is not known what exactly Kwon and Han’s intention was with the company.
Lawyers helped Kwon register the 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, their luck changed dramatically in May 2022 when both currencies crashed, triggering a sell-off in the cryptocurrency market and wiping out billions of dollars from investors.
Since then, Kwon has been on the run from authorities in various countries, including South Korea, the US, 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 company and stay away from legal scrutiny while being one of the world’s most wanted men with the help of a network of lawyers.
According to official registry documents, one of the lawyers is burning colica prominent Serbian lawyer and partner at the Belgrade-based law firm Gecic, which Kwon retained to represent him.
Colic reportedly filed the company’s registration application on behalf of the fugitive.
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