Montenegro to extradite crypto entrepreneur Do Kwon to US

FILE – Montenegrin police officers escort South Korean citizen, Terraform Labs founder Do Kwon in Montenegro’s capital Podgorica, Saturday, March 23, 2024. (AP Photo/Risto Bozovic, File)

Belgrade, Serbia — Montenegro said Friday it will extradite to the United States the South Korean cryptocurrency specialist Do Kwon, who is also wanted by Seoul for the multi-billion-dollar bankruptcy of his company, Terraform Labs.

His lawyers denounced the decision as contrary to European conventions on extradition, and said they will appeal to the country’s constitutional court and to the European Court of Human Rights.

For months, Seoul and Washington have been seeking the South Korean’s extradition for his suspected role in a fraud linked to his company’s failure, which wiped out about $40 billion of investors’ money and shook global crypto markets.

READ: The other crypto bosses in US authorities’ crosshairs

Justice Minister Bojan Bozovic “issued a decision approving the extradition of the accused, Kwon Do Hyung, to the United States of America,” the justice ministry said, referring to him by his full name.

The decision followed a year and a half of court rulings and subsequent reversals regarding his extradition.

“It was concluded that the majority of the criteria prescribed by law favor the extradition request” from the United States, the ministry added in a statement.

The crypto tycoon was arrested in March 2023 at the airport in Podgorica, the Montenegrin capital, while preparing to board a flight to Dubai, in possession of a fake Costa Rican passport.

Before his arrest, he had been on the run for months, fleeing South Korea and later Singapore, before his company went bankrupt in 2022.

‘Stablecoin’ collapse

After a series of rulings by the Montenegrin courts, approving and then cancelling extradition requests, the country’s Constitutional Court lifted the final hurdle on Tuesday.

It said in a ruling that previous proceedings “ensured the appellant’s right to a fair trial and did not raise concerns about a possible violation of the right to family life”.

The court also said that Kwon, during the hearing, “personally consented to expedited extradition to both the Republic of South Korea and the United States”.

Kwon’s Montenegrin lawyers, Marija Radulovic and Goran Rodic, said they have asked both the country’s constitutional court and the European Court of Human Rights to issue stays against the extradition.

The lawyers also said the justice ministry had initially delayed delivering the actual decision to them in an attempt to prevent the appeals.

Montenegro had already deported Kwon’s business partner — identified only by his initials J.C.H. — to South Korea in early February.

Terraform Labs created a cryptocurrency called TerraUSD that was marketed as a “stablecoin”, a token that is pegged to stable assets such as the US dollar to prevent drastic fluctuations.

Do Kwon successfully marketed them as the next big thing in crypto, attracting billions in investments and global hype.

Media reports in South Korea described him as a “genius”.

But despite billions in investments, TerraUSD and its sister token Luna went into a death spiral in May 2022.

Experts said Kwon had set up a glorified Ponzi scheme, in which many investors lost their life savings.

He left South Korea before the crash and spent months on the run.

In January, Terraform Labs officially sought bankruptcy protection in the United States.

The bankruptcy filing would allow Terraform “to execute on its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and US litigation involving the Securities and Exchange Commission”, the company said in a statement.

It said it also intended to “meet all financial obligations to employees and vendors”.

Cryptocurrencies have come under increasing scrutiny from regulators after a string of controversies in recent years, including the high-profile collapse of the exchange FTX.