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Do Kwon, Disgraced Cryptocurrency Firm Founder, Arrested in Montenegro

The individual apprehended in Montenegro is reportedly Kwon Do-hyeong, also known as Do Kwon, the disgraced founder of a cryptocurrency firm that went bankrupt. He is wanted in both South Korea and the United States on charges of fraud and other offenses, according to Interpol.

Kwon, a South Korean citizen, established the blockchain platform that powered TerraUSD and its related token Luna, both of which experienced significant losses within a few days in May 2022. This led to a $40 billion drop in the cryptocurrency market and instilled fear in the speculative sector.

According to Interpol’s national central bureau in Seoul, Kwon’s identity was confirmed by matching fingerprints. On social media, Montenegrin Internal Affairs Minister Filip Adžić announced the day before that a man presumed to be Kwon had been apprehended in the capital, Podgorica.

Image of Do Kwon, Disgraced Cryptocurrency Firm Founder of Terra, is taken to court
Do Kwon, the cryptocurrency entrepreneur, who created the failed Terra (UST) stablecoin, is taken to court in Podgorica, Montenegro, March 24, 2023. REUTERS/Stevo Vasiljevic

We published an article back in May of 2022 detailing the situation unfolding around TerraUSD.

“He was arrested at the airport with counterfeit documentation and is wanted by several countries, including the USA, South Korea, and Singapore,” Adžić said in a Facebook post.

In September, following the failure of his company, investors in South Korea accused Kwon of fraud, prompting a South Korean court to issue an arrest warrant for him.

Kwon is facing charges of fraud and violations of South Korea’s capital markets regulations. He stated in October that he did not consider the allegations to be valid and asserted that they were “politically motivated.”

Despite frequently asserting on Twitter that he was not evading authorities, the crypto developer refused to reveal his whereabouts, citing concerns about his personal safety.

Terraform Labs, which developed TerraUSD, a stablecoin that was supposed to maintain a value of $1, was the company at the heart of the scandal.

The Justice Ministry of South Korea has acknowledged the detention of Kwon and an unidentified person and announced that they will initiate extradition proceedings for both individuals to South Korea.

South Korean prosecutors had earlier suggested that Kwon was concealing himself in Serbia, as the two nations did not have a formal extradition agreement.

Subsequent to Kwon’s detention, he was accused by the U.S. District Court in Manhattan of two counts each of securities fraud, wire fraud, commodities fraud, and conspiracy.

It was actually the failure of TerraUSD that resulted in a market collapse and a crisis in the cryptocurrency sector throughout mid-2022. The Financial Times reported that Kwon’s legal team did not respond immediately to a request for comment.


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