Terraform Labs founder Do Kwon and aide sentenced to four months in Montenegro for passport forgery
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Fugitive cryptocurrency chief Do Kwon, the entrepreneur sought by the US and South Korea in connection with a $40 billion crash, has been sentenced to four months in prison by a court in Montenegro. The 31-year-old South Korean national and Terraform Labs founder was found guilty of attempting to travel with a forged passport.
Kwon was arrested by Montenegrin police in March as he tried to board a flight to Dubai at Podgorica Airport. Alongside him, Han Chang-joon, the former chief financial officer of Terraform Labs, was also convicted of the same crime and handed a four-month sentence. The two were charged with forging official documents and placed in 30-day pre-trial detention after police recovered doctored Costa Rican passports and a separate set of Belgian passports.
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Despite pleading not guilty at their first court hearing in May, Kwon reportedly told the court last week that he obtained the documents in Singapore through an agency selling citizenships of various countries and believed the passports to be genuine. Time spent in detention is included in the prison terms, and the pair can appeal the verdict. “Once we receive the verdict in writing, we will consult with our clients about a possible appeal,” defense lawyer Goran Rodic told Bloomberg.
The court has up to 30 days to officially notify the defense and the prosecutor’s office. Both South Korea and the US have requested Kwon’s extradition from Montenegro, while the courts in the country are yet to decide on those requests in separate proceedings. Kwon and five others connected to Terraform Labs are wanted due to allegations of fraud and financial crimes related to the implosion of its digital currencies in May 2022.
The TerraUSD was designed as a “stablecoin," pegged to stable assets like the US dollar to prevent drastic price fluctuations. However, around $40 billion in market value was erased for the holders of TerraUSD and its floating sister currency, Luna, after the stablecoin plunged far below its $1 peg in May 2022. In September, South Korea asked Interpol to circulate a “red notice” for Kwon across the agency’s 195 member nations to find and apprehend him.
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In February, US regulators charged Kwon and his company Terraform Labs with “orchestrating a multi-billion dollar crypto asset securities fraud.” Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), stated, "We allege that Terraform and Do Kwon 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."
The collapse of the TerraUSD stablecoin and the associated Luna token rocked cryptocurrency markets in May 2022, highlighting the risks and volatility in the crypto space. The ongoing legal battles and regulatory scrutiny surrounding Do Kwon and Terraform Labs serve as a cautionary tale for the cryptocurrency industry.
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