South Korean authorities are advocating for the extradition of Terraform Labs co-founder and former CEO, Do Kwon, in relation to the collapse of TerraUSD (USTC) and LUNA token.
Prosecutors claim that the majority of the alleged crimes occurred in South Korea, and that conducting the trial in the country would best serve the interests of victims impacted by the $40 billion loss in the Terra ecosystem.
The battle for extradition
Dan Sung-han, the lead prosecutor in the case, argues that most of the key evidence and individuals connected to Do Kwon are located in South Korea.
He asserts that the inception and subsequent failure of both cryptocurrencies represent a “systemic crime.”
Kwon and his collaborators are facing charges including fraud, violations of capital market laws, manipulation of transaction volumes using “trader bots,” bribery, and other financial crimes.
If found guilty, Kwon could be subject to the longest jail term ever issued for a financial crime in South Korea’s history.
At the same time, Kwon is also facing criminal fraud charges in the United States, brought forth by federal prosecutors in New York and a civil lawsuit by the Securities and Exchange Commission (SEC).
Kwon’s legal representatives have dismissed the U.S. charges, arguing that the country lacks jurisdiction as the company did not directly market to Americans and neither cryptocurrency was regulated by the SEC.
Do Kwon’s legal troubles
Do Kwon, a South Korean citizen, was apprehended in Montenegro in March on charges of document forgery. Since then, both South Korea and the United States have been attempting to extradite the Terra co-founder. Regulatory authorities in Singapore are also seeking Kwon.
Montenegro has no extradition treaty with Singapore or South Korea but does maintain an older extradition agreement with the U.S. and has extradited American citizens in the past.
Montenegrin Justice Minister Marko Kovač stated that a decision on Kwon’s extradition would consider several factors, including the severity of the criminal offense and the location and timing of the offense.
In late April, South Korean officials indicted Shin Hyun-seong, another co-founder of Terraform Labs, along with nine other individuals in connection with the collapse of the Terra ecosystem.
They face charges of fraud, breach of trust, and embezzlement. These individuals are accused of amassing illicit profits of nearly 460 billion Korean won ($350 million), as reported by Korean daily KBS World. If extradited to his home country, Kwon would face similar charges, with a potential jail term of up to 40 years.
Terra was an early pioneer in the field of algorithmic stablecoins. The ecosystem unraveled when its native stablecoin, USTC, depegged from the U.S. dollar in May 2022, setting off a chain reaction of crises in the crypto industry last year.
The final decision on whether Kwon will be extradited to South Korea or the United States will be made once Montenegrin authorities conclude their case against him for passport fraud.
