On August 1, the Montenegro Appellate Court upheld its decision to extradite Kwon to South Korea. This ruling concludes a prolonged legal battle marked by multiple appeals and judicial reversals. 

The Appellate Court confirmed the June 28 decision by the Higher Court in Podgorica, which approved South Korea's extradition request while rejecting a concurrent request from the United States. 

The ruling emphasized that no appeal was lodged against the Higher Court's decision, making it legally binding. 

Background and Arrest

Do Kwon was arrested in Montenegro in March 2023. He was caught using a counterfeit passport while attempting to board a flight to Dubai with falsified Costa Rican travel documents. 

The arrest was a pivotal moment, triggering a legal tug-of-war between South Korea and the United States, both of which are seeking to prosecute Kwon for his role in the collapse of Terraform Labs' algorithmic stablecoin, Terra (UST), and its associated cryptocurrency, LUNA.

Legal Battles in the U.S. and South Korea

The U.S. Securities and Exchange Commission (SEC) charged Terraform Labs and Kwon in February 2023. The charges stem from the collapse of Terra, which resulted in $40 billion in losses. 

Terraform Labs and Kwon reached a $4.47 billion settlement with the SEC in May. The settlement included $3.58 billion in disgorgement and a $420 million civil penalty. Additionally, the settlement terms prohibit Kwon from serving as an officer or director of any public company.

Kwon's extradition to South Korea marks a critical point in the legal proceedings against him. South Korean authorities have been relentless in their pursuit of justice, aiming to hold Kwon accountable for the massive financial losses suffered by investors. 

The Impact of Terra's Collapse

Terraform Labs, founded in 2018, played a significant role in the cryptocurrency market. Its collapse in May 2022 wiped out at least $40 billion in market value, sending shockwaves through the crypto industry. 

The fallout led to Terraform Labs filing for Chapter 11 bankruptcy in Delaware earlier this year. The collapse of Terra and LUNA exposed vulnerabilities in the algorithmic stablecoin model and underscored the risks associated with speculative investments in the crypto space.