Authorities in the South Eastern European country Montenegro have arrested a person supposed to be Kwon Do-Hyung (Do Kwon), the founder of collapsed cryptocurrency project Terra.
The country’s Minister of Interior, Filip Adzic, confirmed the development, revealing that the individual was arrested at Podgorica airport with falsified documents. Montenegro Police are awaiting official confirmation of the individual’s identity, the official claimed.
U PODGORICI UHAPŠEN JEDAN OD NAJTRAŽENIJIH SVJETSKIH BJEGUNACA
Crnogrska policija lišila je slobode lice za koje se sumnja da je jedan od najtraženijih bjegunaca, južnokorejski državljanin Do Kwon, suosnivač i izvršni direktor Terraform Labs sa sjedištem u Singapuru.
1/2— Filip Adzic (@filip_adzic) March 23, 2023
If confirmed, the latest development marks the first time Do Kwon has been detained in connection to the collapse of the $40 billion Terra (LUNA) project in May 2022. In recent months, authorities in the United States and Singapore have begun probing the fallout of Terra (LUNA) and its algorithmic stablecoin UST, which cost investors billions of dollars.
U.S. Authorities Charge Do Kwon
Shortly after Kwon’s arrest in Montenegro, federal prosecutors in New York charged the Terra (LUNA) creator with fraud.
In a 12-page indictment unsealed on March 23, 2023, prosecutors alleged that Kwon misled investors by hiding some aspects of the Terra blockchain and its tokens, particularly the TerraUST stablecoin and LUNA, from customers, including its technology and the extent to which users had adopted it.
“Kwon agreed with others to defraud purchasers of cryptocurrencies issued by TFL by deceiving those purchasers about the effectiveness of the algorithmic mechanism that purportedly ensured the stability of UST’s price through false statements and market manipulation.”
Prosecutors claimed that Kwon contacted representatives of an American-based crypto trading and investment firm for help in altering the market price of TerraUST.
The South Korean business entrepreneur, who has been on the run since the collapse of the Terra ecosystem last year, has been charged with conspiracy to defraud investors, commodities fraud, securities fraud, wire fraud, and conspiracy to engage in market manipulation.
Kwon also faces civil action from the Securities and Exchange Commission (SEC) for violating federal security laws by selling an “interconnected suite of crypto asset securities” to U.S. customers without proper registration with the authorities.
The Terraform Labs CEO is charged in other jurisdictions, including his home country, South Korea, and Singapore, where some investors sued him for orchestrating a multibillion-dollar fraud.
Following his arrest yesterday, Montenegro’s interior minister said that authorities from the U.S. and Singapore have filed to extradite Kwon from the European country.
Update: This article was updated on March 24 at 16:09 GMT to include information about U.S. authorities charging the Terraform Labs CEO. An earlier version only shared news of his alleged arrest in Montenegro
