The Constitutional Court of Montenegro has rejected the appeal of Do Kwon, the co-founder of Terraform Labs, against his extradition. This decision removes an important legal barrier in the extradition process.
The decision is reported to be unanimous. It points out the legal flaws in Kwon's appeal and affirms the previous ruling in favor of extradition.
Do Kwon is likely to be extradited to the US
The case has now moved to the Montenegrin Minister of Justice, who will decide whether Kwon will be extradited to South Korea or the United States. Reports from South Korea have suggested a higher likelihood of extradition to the US, reflecting the position of the Ministry of Justice.
Both countries want Kwon to face charges related to the collapse of the Terraform Labs cryptocurrency ecosystem, involving TerraUSD and Luna coin. The collapse in May 2022 wiped out around $40 billion from the market, marking one of the largest crashes in financial history.
Large transactions triggered the collapse of the Terra stablecoin on May 7, 2022. Source: ChainalysisMost notably, the collapse of the UST stablecoin kicked off the 2022 crypto winter. The contagion effect exposed the misconduct of large platforms like FTX and Celsius. This has led to heightened regulatory scrutiny of stablecoins and DeFi globally.
In March 2023, Kwon was arrested in Montenegro while attempting to travel with a forged passport. Given the severity of the case, his extradition is seen as a potential precedent for cross-border law enforcement in crypto-related crimes.
Do Kwon recently photographed outside the Montenegro court. Source: X (formerly Twitter).Largest financial settlement in SEC history
In June 2024, Terraform Labs reached a settlement with the SEC, agreeing to pay $4.47 billion. The settlement includes $3.6 billion in disgorgement, $420 million in civil penalties, and $467 million in pre-judgment interest. Do Kwon was also ordered to pay over $200 million in penalties, including $110 million in disgorgement, $80 million in civil penalties, and $14.3 million in pre-judgment interest.
Meanwhile, there are reports that Kwon has political connections in Montenegro. In 2023, the country's Prime Minister called for an investigation into allegations that Kwon had financial ties with a political rival. Kwon is said to have supported the Europe Now party, led by Milojko Spajic. His support has raised questions about the potential influence on the extradition process.
Overall, the court's decision has brought Kwon closer to facing justice, while also highlighting the challenges of international legal coordination in the cryptocurrency realm.
Join the BeInCrypto community on Telegram to stay updated on the latest analyses and news about the financial markets in general and cryptocurrencies in particular.
