Do Kwon, the fugitive cryptocurrency boss responsible for the $40bn collapse of TerraUSD and Luna tokens, has been arrested in Montenegro, according to South Korean police. Mr Kwon has been charged with fraud by US prosecutors in connection with the alleged “multi-billion dollar crypto asset securities fraud” carried out by his company, Terraform Labs. The firm has yet to comment on the matter.
South Korean authorities had issued an arrest warrant for Mr Kwon last September, believing that his company had violated capital market rules. They had previously thought he was in Serbia, as the two countries have no extradition treaty, but eventually located him in Montenegro. According to Montenegro’s interior minister Filip Adzic, Mr Kwon was travelling under a false name with fake documents when he was detained at Podgorica’s airport.
Mr Kwon now faces charges of securities fraud, wire fraud, commodities fraud, and conspiracy, following his indictment at the US District Court in Manhattan. The collapse of TerraUSD and Luna tokens in May 2022 triggered a sell-off in major cryptocurrencies, such as Bitcoin, Ethereum, and Tether, and globally caused investors to lose an estimated $42bn, according to blockchain analytics firm Elliptic. Mr Kwon had previously denied that he was in hiding but had never disclosed his location.
Montenegro does not have extradition treaties with the US or South Korea, raising questions about how Mr Kwon will be brought to face trial in either country. However, South Korean police have confirmed that the suspect in Montenegro is indeed Mr Kwon, after his fingerprints matched official records.
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In February, US financial regulators accused Mr Kwon and Terraform Labs of misleading investors and failing to provide the public with “full, fair, and truthful disclosure” in relation to Luna and TerraUSD. The tokens were allegedly promoted as increasing in value, despite concerns about their stability, ultimately leading to their collapse.
Following the announcement of Mr Kwon’s arrest, the crypto community has been reacting with mixed emotions. Some have praised the authorities for bringing him to justice, while others have expressed concerns about the impact his arrest may have on the wider cryptocurrency market.
The collapse of TerraUSD and Luna tokens was a major event in the world of cryptocurrencies, leading to widespread losses and concerns about the stability of the market. Mr Kwon‘s arrest marks an important step in bringing those responsible to account and could have implications for the future of the cryptocurrency industry.