Montenegro Rejects Do Kwon’s Appeal, US Extradition is Likely

Montenegro’s Constitutional Court has rejected an appeal by Do Kwon, the co-founder of Terraform Labs, against his extradition. This decision removes a significant legal barrier in the extradition process.

The decision was reportedly unanimous. It cited legal flaws in Kwon’s appeal and affirmed a previous ruling supporting extradition.

Do Kwon is Likely to be Extradited to the US

The case now moves to Montenegro’s justice minister, who will determine whether Kwon will be extradited to South Korea or the United States. Korean reports have suggested a stronger likelihood of extradition to the US, reflecting the justice ministry’s position.

Both nations want Kwon for charges related to the collapse of Terraform Labs’ crypto ecosystem, which involved the TerraUSD and Luna coins. The crash in May 2022 wiped out approximately $40 billion from the market, marking it one of the largest crashes in financial history.

Major Trades that Triggered Terra’s Stablecoin Collapse on May 7, 2022. Source: Chainalysis

Most notably, the collapse of UST stablecoin started the infamous crypto winter in 2022. The ripple effect exposed malpractices of other major platforms like FTX and Celsius. This led to regulatory scrutiny of stablecoins and DeFi globally.

Back in March 2023, Kwon was arrested in Montenegro while attempting to travel with a falsified passport. Due to the gravity of the incident, his extradition case is viewed as a potential precedent for cross-border enforcement in cryptocurrency-related crimes.

Do Kwon Recently Pictured Outside Montenegro Court. Source: X (formerly Twitter).

The Largest Financial Settlement in SEC History

Earlier in June 2024, Terraform Labs reached a settlement with the SEC, agreeing to pay $4.47 billion. The settlement included $3.6 billion in disgorgement fines, a $420 million civil penalty, and $467 million in pre-judgment interest.

Also, Do Kwon himself was ordered to pay over $200 million in penalties. This included $110 million in disgorgement fines, $80 million in civil penalties, and $14.3 million in interest.

Meanwhile, reports have surfaced about Kwon’s alleged political connections in Montenegro. In 2023, the country’s prime minister called for an investigation into claims that Kwon had financial ties to a political rival.

Kwon reportedly supported the Europe Now party, led by Milojko Spajic. His backing raised questions about potential influence over the extradition process.

Overall, the court’s decision has brought Kwon closer to facing justice while highlighting the challenges of international legal coordination in the crypto space.