The former Terraform Labs co-founder, Do Kwon, has had his previous extradition request by Montenegro’s High Court declined by the Appeal Court. Do Kwon was the subject of extradition move by authorities from the United States and his native South Korea over the fallout of the TerraUSD stablecoin and the crypto asset Luna.
Appeal Court Overrules Extradition
Montenegro’s Appeal Court disagreed with the High Court’s decision to detain Do Kwon, citing flaws in the legal process that led to the initial decision on November 17. The Appeal Court stated that the reasoning for Do Kwon’s extradition was insufficient and lacked clarity, pointing out several legal errors.
As a result, the Appeal Court reversed the High Court’s decision and remanded the case to the Primary Court in Montenegro’s capital, Podgorica. Furthermore, the Appeal Court ruled against extraditing Hon Chang Joon, Do Kwon’s associate, to the US or South Korea for the time being.
However, it upheld the 4-month prison sentences for Kwon and Joon in Montenegro.
Do Kwon’s Arrest
Do Kwon and Hon Chang Joon, Terra’s Chief Financial Officer (CFO), who were Terraform Labs executives during the Terra (LUNA) crash, evaded capture for several months before being apprehended at Podgorica airport on March 23, 2023. Their attempt to flee to Dubai using forged Costa Rican passports was foiled by border officials, resulting in their Arrest.
Initially, both individuals denied that their documents were fraudulent before they later admitted to getting the fake passports from a Singapore-based travel agency. Their capture marked the end of months of evasion following their involvement in the Terra crash.
The Extradition Requests
Following Kwon’s Arrest, both South Korea and the United States have requested extradition from Montenegro. The US Securities and Exchange Commission (SEC) claimed that the Terra ecosystem was a fraudulent cryptocurrency scheme disguised as a securities investment.
The SEC claims that the scheme involved multiple malicious actors. The former co-founder is alleged to be the mastermind behind the $40 billion crash of the firm’s native cryptocurrency and algorithmic stablecoin.
Kwon had reportedly agreed to an accelerated extradition process, but the High Court chose the longer, standard legal process because two different countries sought his extradition. The High Court in Podgorica set out the conditions for Do Kwon’s extradition in November 2023, leaving the final decision to Montenegro’s justice minister.
However, the recent Appeal Court decision indicates that the Podgorica Basic Court will now look into Kwon’s case in a new round of proceedings. Observers believe that high-worth financiers willing to back highly speculative financial products aided Mr. Kwon’s rise.
Some of those investors profited handsomely from the early sale of their Luna and TerraUSD coins, while retail traders experienced massive losses from the crash. Meanwhile, some finance analysts opined that the crash of Luna and TerraUSD is a case study in crypto hype and offers many lessons to potential investors.
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