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Highlights
- The Appeals Court of Montenegro has overturned the order to extradite Do Kwon to South Korea.
- Kwon faces charges related to the collapse of Terraform Labs, causing significant financial losses.
- The SEC seeks $4.7 billion in disgorgement and prejudgment interest, plus $520 million in civil penalties.
The Appeals Court of Montenegro has overturned an order to extradite Do Kwon to South Korea. Kwon, the cryptocurrency entrepreneur behind Terraform Labs, faces charges related to the collapse of his company, which led to significant financial losses.
Terraform Labs Founder Do Kwon Extradition Blocked
For months, both South Korea and the United States sought Kwon’s extradition due to his suspected role in the Terraform Labs scandal. The company’s collapse wiped out approximately $40 billion of investors’ money, shaking the global crypto markets. The Appeals Court accepted the appeals of Kwon and his defense attorneys, revoking the earlier decision by the High Court in Podgorica. This ruling returns the case to the first-instance court for retrial and decision.
Kwon had been on the run for months after fleeing South Korea and Singapore before the company’s crash in 2022. He and an accomplice were arrested in Montenegro in March last year. Montenegro deported Kwon’s business partner, identified only by his initials J.C.H., to South Korea in early February.
Terraform Labs marketed TerraUSD as a stablecoin, designed to prevent drastic fluctuations by pegging to stable assets like the US dollar. Kwon successfully promoted TerraUSD and its sister token, Luna, as the next big thing in crypto, attracting billions in investments and global hype. However, both tokens entered a death spiral in May 2022, leading to significant financial losses for investors.
Experts have claimed that Kwon set up a glorified Ponzi scheme, causing many investors to lose their life savings. Terraform Labs’ collapse remains one of the most significant financial debacles in the cryptocurrency world.
Terraform Labs Faces SEC’s Multi-Billion Penalty
The United States Securities and Exchange Commission (SEC) sought to impose significant penalties on Terraform Labs and Do Kwon following a civil case verdict. In an April 19 filing in the U.S. District Court of New York, the SEC demanded $4.7 billion in disgorgement and prejudgment interest, plus $520 million in civil penalties. Terraform suggested a maximum civil penalty of $3.5 million, which Kwon opposed, arguing for a much lower amount of $800,000.
The SEC also recommended disqualifying Kwon from being an officer or director of a security issuer and ensuring full disclosure of banking accounts and assets. Additionally, the SEC wants to impose a conduct-based injunction on Terraform to prevent any repetition of this misconduct in the future.
Also Read: Chinese Woman Sentenced to Over 6 Years Jail Term in 61,000 BTC Fraud Case
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