South Korea to seek extradition of Luna crypto founder
South Korea has stated that it will seek the extradition of fugitive crypto entrepreneur Do Kwon, following the founder of Terraform's arrest in Montenegro and the United States' swift filing of fraud charges.
Friday, prosecutors disclosed this information to AFP.
Kwon, whose full name is Kwon Do-hyung, has been accused of fraud in connection with his company's dramatic collapse in 2017, which wiped out approximately $40 billion in investor funds and shook global crypto markets.
The 31-year-old was arrested at the Podgorica airport in Montenegro based on a South Korean arrest warrant, according to the country's interior ministry.
Following a lawsuit by the US Securities and Exchange Commission, the United States charged him with eight counts, including securities fraud and wire fraud, shortly after his arrest.
Friday, South Korean authorities confirmed that Kwon had been placed on a wanted list for violations of the country's capital markets act and vowed to seek his extradition.
"South Korean prosecutors will take steps to return Kwon Do-hyung to his home country. Kim Hee-kyung, a spokeswoman for the Seoul Southern District Prosecutors' Office, told AFP, "We are working on the process."
Kwon reportedly flew from South Korea to Singapore prior to the company's May 2016 crash.
In September, South Korean prosecutors revoked his passport and requested that Interpol place him on the agency's red notice list for all 195 member nations.
After the Singapore Police Force stated that he was not in the country, however, questions about his whereabouts grew.
Authorities in Montenegro reported on Thursday that Kwon used forged travel documents from Costa Rica to board a flight to Dubai.
According to Montenegro's interior ministry, during luggage inspection, travel documents from Belgium and South Korea were discovered, while Interpol checks revealed that the Belgian documents were forged.
Numerous investors lost their life savings when Kwon's Luna and Terra entered a death spiral, prompting multiple criminal investigations into the crash by South Korean authorities.
The National Police Agency of South Korea stated that it would work with the country's prosecutors to seek Kwon's extradition.
"As an organization that works closely with Interpol, we will cooperate actively with the Seoul Southern District Prosecutor's Office," National Police Agency official Jeong Beom-seok told AFP.
Montenegro is also a signatory to the European Convention on Extradition, a multilateral convention that facilitates extradition between member nations, according to a statement from the justice ministry.
The statement continued, "The justice ministry will proceed with the extradition process in accordance with applicable laws and international agreements."
As a result of a string of recent controversies, including the high-profile collapse of the exchange FTX, regulators around the world have begun to scrutinize cryptocurrencies more closely.
According to the U.S. Securities and Exchange Commission, Kwon is accused of "orchestrating a multibillion-dollar crypto asset securities fraud."
Cho Dong-keun, emeritus professor of economics at Myongji University, told AFP, "It is true that Kwon has caused too much harm to too many people with something that entailed a great deal of unknown risks."
"It is extremely unfortunate that he fled. A responsible adult and entrepreneur would have remained and provided clarification. The fact that he attempted to evade authorities by using counterfeit passports demonstrates his character."
His TerraUSD was marketed as a "stablecoin," which is typically pegged to stable assets such as the US dollar in order to prevent extreme price fluctuations.
However, TerraUSD was a "algorithmic stablecoin" that was not backed by assets and was instead pegged to its floating sister currency Luna. In addition, approximately $40 billion in market value was lost when the two currencies began their freefall in May 2022.
Bloomberg News, citing the US SEC, reported that Kwon and Terraform Labs moved more than 10,000 bitcoin out of their failed project and converted some of the tokens into cash via a Swiss bank.
Kim Dae-jong, a professor of business administration at Sejong University, told AFP, "Kwon must certainly be held accountable for his actions."
"The bottom line is that Kwon did not operate the business in accordance with laws and principles. Kim stated, "He exploited it for his own financial gain."
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