South Korea has announced that it will seek the extradition of fugitive crypto entrepreneur Do Kwon following the arrest of the founder of Terraform in Montenegro and an outright denial by the US of fraud charges.
This was reported by the prosecutor’s office on Friday to the news agency AFP.
Kwon, who goes by the name Kwon Do-hyun, has been accused of a scam that rocked the global cryptocurrency market after the company’s dramatic collapse cost investors about $40 billion last year.
The Interior Ministry said on Thursday that a 31-year-old man was arrested at Podgorica airport in Montenegro on orders from South Korea.
The US brought him eight charges, including securities fraud and wire fraud, following a lawsuit filed by the US Securities and Exchange Commission (SEC) immediately after his arrest.
On Friday, South Korean authorities confirmed that Kwon was wanted for abusing the country’s capital markets and said they would extradite him.
Hee Kyung Kim, a spokesman for the Seoul Southern District Prosecutor’s Office, told AFP, “Korean prosecutors will take steps to extradite Kwon Do Hyun.”
Kwon is known to have flown from Korea to Singapore before the company collapsed last May.
Last September, South Korean prosecutors ordered Interpol to put him on the red list of 195 member states’ most wanted list and suspend his passport.
However, questions about his whereabouts rose when Singapore police said he was out of the country.
Montenegrin authorities said on Thursday that Kwon “used fake travel documents from Costa Rica” during passport control to board a flight to Dubai.
According to the Montenegrin Interior Ministry, baggage checks found travel documents from Belgium and South Korea, and an Interpol investigation found that the Belgian documents were forged.
When Kwon’s Luna and Terra fell into a deadly cycle, many investors lost their savings, and South Korean authorities opened several criminal investigations in the fall.
The Korean National Police Agency said it would work with prosecutors to extradite Kwon.
Jung Beom-sook, an official with the National Police Agency, told AFP, “As an organization that cooperates with Interpol, we will actively cooperate with the Seoul South District Prosecutor’s Office.”
The Ministry of Justice stated: “Montenegro has also signed multilateral agreements facilitating extradition between member states.”
In other words, cryptocurrencies are under scrutiny from regulators around the world after a number of recent controversies, including the collapse of the FTX exchange.
According to the U.S. Securities and Exchange Commission (SEC), Kwon is accused of “defrauding multi-billion dollar crypto-currency securities.”
“It’s true that Kwon has done too much harm to too many people with something that comes with a lot of unexplained risks,” Cho Dong Geun, professor emeritus of economics at Myeongji University, told AFP. “It’s a pity he ran away.
Revealing that he tried to hide from the authorities even with a fake passport reveals the nature of the responsible adult and businessman who will remain in office.
TerraUSD is advertised as a “stablecoin” that is usually pegged to a stable asset such as the US dollar to prevent wild price fluctuations.
However, TerraUSD is an “algorithmic stablecoin”. It is not backed by assets and is only pegged to its floating sister currency Luna.
And in May 2022, about $40 billion of market value was wiped out as both currencies were in free fall.
Kwon and Terraform Labs also removed more than 10,000 bitcoins from the failed project and converted some of the tokens into cash through Swiss bank Bloomberg News.
This is reported by the SEC with reference to the SEC. Kim Dae-jung, a professor of business administration at Sejong University, told AFP, “Kwon needs to take responsibility for his actions.”
“The bottom line is that Chairman Kwon is not running the company according to laws and policies.
It was used for personal financial gain,” he said.