US prosecutors have arrested Do Kwon, the cryptocurrency entrepreneur behind the crash of two digital currencies (TerraUSD and Luna) that lost over $40 billion last year, and charged him with fraud. Kwon, the wanted co-founder of Terraform Labs behind a multibillion-dollar crash of the firm’s cryptocurrency last year, was arrested in Montenegro in the US.
An eight-count indictment against Kwon was made public in the US District Court in Manhattan after his arrest, reports said. Meanwhile, South Korean prosecutors said on Friday they will seek the extradition of Kwon. South Korea has joined the European Convention on Extradition, a multilateral treaty to facilitate extradition between the member states, of which Montenegro is also a member, the justice ministry said.
It is unclear, however, whether Kwon would be sent to South Korea, reports Yonhap news agency. As he is also facing criminal charges in the United States, he could be handed over to the US. Kwon, who had been a fugitive for several months after last being spotted in neighbouring Balkan country Serbia in December last year, was detained along with one of his close aides, surnamed Han.
The disgraced entrepreneur has been under investigation for alleged fraud and tax evasion after investors in TerraUSD and Luna filed complaints against Kwon last May, accusing him of a Ponzi scheme over the loss of billions of won following the crash of both coins.
Prosecutors have since sought an arrest warrant for Kwon on allegations including providing false information to investors and the violation of the capital market law.
Interpol also issued a red notice, used for the highest level of wanted suspects and criminals. His passport has since been invalidated.
Prosecutors are also continuing to investigate Daniel Shin, another co-founder of Terraform Labs, on charges of gaining illegal profits before the collapse of the coins.
TerraUSD was designed as a stablecoin, which was pegged to stable assets like the US dollar. But holders of TerraUSD and Luna lost more than an estimated $40 billion in market value after the stablecoin plunged far below its $1 peg in late May.
