Seoul calls for Do Kwon's extradition

The prosecutor leading South Korea’s investigation into Terraform Labs co-founder Do Kwon and his failed algorithmic stablecoin UST believes that the alleged fraudster has to face trial in his native country.

do kwon arrest
do kwon arrest

Dan Sung-han, the director of Seoul Southern District’s joint financial crimes team, told the Wall Street Journal that Do Kwon’s extradition to South Korea would be the best way to bring justice to the victims of the Terra/Luna crash in May 2022, which wiped out at least $40 billion from the market in a little over 72 hours.

According to Sung-han, most of the evidence in Kwon’s case is based in South Korea, and this is also where most of the crimes he is accused of took place. Do Kwon is a South Korean national, but is also wanted in the US, where SEC charged him with securities fraud, and in Singapore, where Terraform Labs was headquartered.

“Given the nature of this incident, we think investigating the case in South Korea would be the most efficient way of bringing justice [to investors]”, the prosecutor told WSJ.

A disgraced crypto entrepreneur was arrested in Podgorica, Montenegro on March 23 along with Terraform Labs chief financial officer Han Chang-joon when they attempted to board a flight to Dubai using falsified travel documents. Both have been detained in the country since, as Do Kwon has been subject to Interpol’s red notice since September.

In South Korea, Do Kwon may face over 40 years in jail, which would be the longest prison sentence for financial fraud in the country’s history, Sung-han told the Journal. However, he may first have to serve time in Montenegro — a potential sentence of up to five years in prison — if he’s convicted of using forged passports.

“In the case when we receive several extradition requests, I would like to say that determining to which state they will be extradited is based on several factors like the severity of the committed criminal offense, the location and time when the criminal offense has been committed, the order in which we have received the request for extradition and several other factors,” Montenegrin Justice Minister Marko Kovač said during March 29 press conference.

Read also: Terra’s Do Kwon regrets too much shitposting on Twitter

For now, it’s unclear to which country, if any, Do Kwon may be extradited. On the one hand, the US criminal charges would likely carry a stronger sentence, since the SEC alleges that nearly all digital assets in the Terra ecosystem should be seen as unregistered securities under the Howey test. Meanwhile, the Korean court has recently ruled that Terra Classic (LUNC) — the original Terra LUNA coin that was rebranded after it plunged to a fraction of a cent in May — is not a security. Unless the verdict is invalidated by Korea’s Supreme Court, as prosecutors appealed, the charges related to violations of the Capital Markets Act against Do Kwon and his associates are likely to be dropped.

On the other hand, Montenegro has an extradition treaty with South Korea, but no such agreement with the United States, although it has previously turned over fugitives at the request of the US authorities. Plus, all his key accomplices and evidence in Kwon’s case are based in South Korea as well.

According to Kovač, "the U.S. requested the extradition of Do Kwon through diplomatic channels, in the same way that a temporary arrest was requested," while South Korean diplomatic representatives handed an official petition for extradition. Both countries also requested the laptops seized from Kwon and Chang-joon.

Kwon’s whereabouts were unknown since Terra/Luna collapse in May, although the disgraced crypto founder repeatedly denied being on a run and maintained that South Korean charges against him were politically motivated. He also implied that the downfall of his protocol was a result of the design flaws and not a deliberate fraud as both South Korean and the US prosecutors allege.

Do Kwon’s court hearing on charges of falsifying identification documents will take place in Montenegro on May 11.