A Montenegro court has extended Do Kwon’s detention by six months as he awaits trial for potential extradition, Agence France Presse reported Thursday.
The former Terraform Labs CEO has been in custody in Montenegro since late March following his arrest at Podgorica Airport in the nation’s capital for allegedly carrying forged travel documents. He faces two separate criminal cases in Montenegro: one related to the alleged possession of counterfeit documents and the other concerning his possible extradition.
Both South Korea and the United States are seeking Kwon’s extradition due to his suspected involvement in a fraud linked to the dramatic collapse of his company last year. The incident wiped out approximately $40 billion of investors’ money and sent shockwaves through the global crypto markets.
Do Kwon, a South Korean entrepreneur, founded Terraform Labs, the company behind TerraUSD (UST), a stablecoin that was supposed to maintain parity with the US dollar. The stability of UST was allegedly ensured by a balancing arbitrage mechanism with LUNA, the ecosystem’s other, more speculative cryptocurrency.
However, in May 2022, UST lost its parity with the US dollar, triggering a cascade effect that collapsed the Terra ecosystem almost overnight and wiped billions from the market. Within months of Terra’s collapse, other major players in the industry including Celsius, Voyager, BlockFi — and eventually FTX — failed one after another.
A South Korean court issued a warrant for Kwon’s arrest in September 2022; that same month Interpol issued a red notice on Kwon, requesting law enforcement worldwide to arrest him on sight. Kwon was eventually apprehended in Montenegro on March 23 of this year; he was charged with several crimes by U.S. law enforcement the next day.
The arrest and ongoing detention of Kwon have stirred political controversy in Montenegro. During the recent parliamentary elections, interim Prime Minister Dritan Abazovic and his allies accused Europe Now’s leader Milojko Spajic of having ties with Kwon. The allegations may have impacted Europe Now’s performance at the polls, leading to the party’s current efforts to form a coalition.
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