Do Kwon Extradited to the U.S.: Faces Justice for Terra/Luna Collapse

Montenegro officially extradited Do Kwon, co-founder of Terraform Labs, to the United States. The move follows a year-long legal battle involving competing extradition requests from South Korea and the U.S., ultimately resolved by Montenegro's Justice Ministry.

The Extradition Details

On December 31, 2024, Montenegrin police handed Do Kwon over to FBI officers at the Podgorica Airport. Prime Minister Milojko Spajić confirmed the transfer via a post on X, stating that Kwon would face charges in the United States. This decision comes after Justice Minister Bojan Božović rejected South Korea’s extradition request just days earlier.

In a statement, Božović emphasized Montenegro’s zero-tolerance stance on fraud while supporting legitimate technological innovation. He framed the extradition as a testament to Montenegro’s commitment to international justice.

Legal Battles and the Terra/Luna Collapse

Do Kwon's troubles began with the catastrophic collapse of the TerraUSD stablecoin and its sister token Luna in May 2022. Promoted as a groundbreaking financial tool, TerraUSD relied on an algorithmic mechanism critics deemed unstable. When its value plummeted, the interconnected Luna token also collapsed, wiping out $33.9 billion in market value.

The implosion triggered a global outcry, with regulators warning of the systemic risks posed by poorly managed stablecoins. Authorities in both the U.S. and South Korea charged Kwon with fraud, market manipulation, and other crimes.

Arrest and Prolonged Legal Saga

After months in hiding, Kwon was arrested in Montenegro in March 2023 while attempting to travel using falsified Costa Rican and Belgian passports. His arrest added document forgery to his growing list of legal issues.

For over a year, Montenegrin courts deliberated on the case, with Kwon's legal team filing multiple appeals to delay the process. Ultimately, Montenegro prioritized the U.S. request, citing comprehensive criteria evaluated by the Department of Justice.

In the U.S., Kwon faces eight felony charges, including securities fraud, wire fraud, and conspiracy. The Securities and Exchange Commission (SEC) has also filed civil charges against Kwon and Terraform Labs. In April 2024, the SEC found both guilty of fraud, imposing penalties of $4.5 billion.

Gary Gensler, SEC Chair, 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. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors."