Montenegro arrests US$40bn South Korean crypto-fugitive

Do Kwon, the South Korean blamed for a US$40 billion collapse of terraUSD and luna cryptocurrencies, has been arrested in Montenegro and charged with fraud in the US.

The South Korean authorities asked Interpol to issue a red notice for Kwon across the international policing agency’s 195 member nations to apprehend him.

US prosecutors announced eight charges against the 31-year-old, including securities, wire and commodities fraud and conspiracy.

Montenegro lacks extradition treaties with the US or South Korea.

Montenegro’s interior minister Filip Adzic tweeted: “The person is suspected of being one of the most wanted fugitives, South Korean national Do Kwon, a co-founder and CEO of the Singapore-based Terraform Labs. The former cryptocurrency king, who is behind losses of over $40 billion, has been apprehended at the Podgorica airport with forged documents.”

Kwon and another South Korean man were trying to fly to Dubai using documents from Costa Rica, which were flagged by Interpol checks, the interior ministry said.

The two men had been hiding in Serbia but moved to Montenegro after South Korean investigators tracked their whereabouts and asked the Serbian authorities to detain them, the interior ministry said.

South Korea sent agents to Belgrade to negotiate, in the absence of a bilateral extradition treaty.

Earlier this year US regulators accused Kwon and his Terraform Labs firm of “orchestrating a multibillion-dollar crypto-asset securities fraud”.

The firm has not made a statement.

Kwon and Terraform Labs also face a civil case from the US Securities and Exchange Commission.

Holders of terraUSD and luna, its floating sister currency, lost about $40 billion after they fell below a $1 peg last May.

TerraUSD was supposedly pegged to the dollar to prevent price swings but the authorities claim the values of the token and luna were linked.

Last month US financial regulators said Kwon and Terraform Labs “failed to provide the public with full, fair and truthful disclosure as required for a host of crypto asset securities, most notably for luna and terraUSD”.

They purportedly claimed that the currencies would increase in value and lied about terraUSD’s stability.

The collapse close to zero last May triggered a selloff in major cryptocurrencies such as bitcoin, ethereum and tether.

The South Korean authorities have opened several criminal investigations after some investors lost their life savings.

Do Kwon. Picture credit: YouTube