The Constitutional Court of Montenegro has rejected the appeal of South Korean crypto mogul Do Kwon against extradition, closing another legal loophole for the Terraform Labs co-founder.
According to a report by the Korea JoongAng Daily, the court's unanimous decision highlighted the legal contradictions in Kwon's appeal and upheld the previous ruling favorable to his extradition.
Kwon has become the focus of global investigations following the collapse of his crypto empire in 2022, with both the U.S. and South Korean governments accusing him of fraud and other financial crimes related to the $40 billion implosion of the Terra-Luna ecosystem.
The Montenegro court's decision leaves Kwon's legal fate in limbo, as this international extradition case could set a precedent for cross-border legal accountability in the crypto space.
The Legal Battle Stemming from the Terra-Luna Fallout
Kwon's legal battle began after his Terra-Luna crypto ecosystem collapsed in May 2022, wiping out around $40 billion in market value.
The event triggered investigations into allegations of fraud, market manipulation, and securities law violations, and Kwon was arrested in Montenegro in March 2023 while attempting to use a fake passport.
Considered one of the most significant events in crypto history, the Terra-Luna collapse shook investor confidence in stablecoins and DeFi, leading to tightened regulations worldwide.
In April, a U.S. court indicted Terraform Labs and Kwon for fraud in a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC), accusing them of deliberately deceiving investors and recklessly handling client funds.
Since his arrest, the Montenegrin judiciary has faced the complexities of the dual extradition requests related to Kwon, with the decision expected to have a significant impact on the geopolitical dynamics between the U.S. and South Korea.
The Terraform-SEC Lawsuit
In June, Terraform Labs agreed to pay the SEC around $4.47 billion as part of a settlement with the U.S. securities regulator for its collapse, wiping out $40 billion in investor assets.
The penalties include around $3.6 billion in disgorgement, $420 million in civil penalties, and nearly $467 million in prejudgment interest.
Under the settlement plan, Kwon is required to pay $110 million in disgorgement, $80 million in civil penalties, and around $14.3 million in prejudgment interest.
The Involvement of the Montenegrin Prime Minister with Terraform Labs
Just a week after Terraform Labs reached a settlement with the SEC, findings from a court document in April sparked controversy over the involvement of Montenegrin Prime Minister Milojko Spajic in the crypto company.
A report from the Montenegrin media outlet Vijesti revealed that Spajic, who took office in October 2023, had invested $75,000 to purchase 750,000 Terra (LUNA) Tokens from the collapsed company in April 2018.
Prior to the SEC's disclosure of the documents, Spajic had claimed that he had never personally invested in this collapsed crypto project — a claim proven false when the documents listed his name among Terraform Labs' early investors in April 2018.
