Terraform Labs founder Do Kwon faces US extradition: WSJ

Montenegro plans to extradite Do Kwon to the US over South Korea, the Wall Street Journal reports

December 7, 2023 11:05 am

Terraform Labs and DansFi/Shutterstock modified by Blockworks

Former Terraform Labs CEO Do Kwon may be on his way to the US, according to a report from the Wall Street Journal.

The Journal reports that Montenegro plans to extradite Kwon to the US rather than South Korea. Kwon faces charges in both countries.

Kwon has been held in prison in Montenegro since March after authorities alleged that he falsified travel documents. He was sentenced to four months in prison back in June.

The US Securities and Exchange Commission has an open case against both Kwon and Terraform Labs, alleging the offer and sale of unregistered securities. South Korea charged Kwon with fraud and violations of the country’s capital markets laws.

Both the company and Kwon faced scrutiny from regulators after the collapse of the algorithmic stablecoin TerraUSD (UST). The stablecoin’s failure triggered a $40 billion crash in the crypto market and spurred the bankruptcies of multiple lenders with exposure to UST, including Celsius and Voyager.

Kwon’s extradition was approved by a court last month. Justice Minister Andrej Milovic was given the decision on where to send Kwon. According to local media reports in Montenegro, Kwon attempted to appeal the extradition.

The Journal report cites unnamed sources and quotes Milovic as saying that the “public will be informed of the decision in a timely manner.”

In the US, the SEC and Terraform have gone back and forth in regards to a deposition from Kwon — which Kwon’s lawyers argued was “impossible” — and a summary judgment from Judge Jed Rakoff.

The SEC wants Rakoff to rule on whether or not the tokens offered were indeed securities, as the regulator alleges, so that the decision is not up to a jury.

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