US to Challenge Extradition of Terra Founder Do Kwon to South Korea

U.S. prosecutors plan to challenge a decision by Montenegro’s High Court to extradite Terra founder Do Kwon to his native South Korea.

“The United States continues to seek Kwon’s extradition in accordance with relevant international and bilateral agreements and Montenegrin law,” the Justice Department said in a statement to news outlet Bloomberg.

Earlier this week, the High Court of Montenegro ruled that Do Kwon could be extradited to South Korea upon completion of his jail sentence at Spuž prison, following the Court of Appeals’ decision to reject a request to extradite him to the U.S..

Following his arrest and sentencing in Montenegro on charges of using a forged passport, Do Kwon has been the focus of an ongoing jurisdictional battle between U.S. and South Korean prosecutors.

Kwon faces charges in both countries relating to the collapse of Terra’s ecosystem in 2022, when the algorithmic stablecoin TerraUSD (UST) depegged from the U.S. dollar. The subsequent collapse of Terra’s LUNA cryptocurrency sparked contagion in the crypto market that wiped out billions of dollars in value, serving as the catalyst for a years-long bear market.

The charges in both the U.S. and South Korea, which include violating capital markets rules, could put Kwon behind bars for decades, according to a member of South Korea’s financial crime investigation bureau.

As well as a federal criminal trial in New York, Kwon faces a civil lawsuit from the U.S. Securities and Exchange Commission (SEC), which is set to go to trial without him as the Kafkaesque tug-of-war between the U.S. and South Korea drags on.

Do Kwon’s extradition to the U.S. has so far been approved twice by a lower court, before being recalled by the appellate court, with the Court of Appeals finding that the High Court’s original decision was annulled because of the order in which the U.S. and South Korea filed their petitions.

Meanwhile, a group of South Korean Terra investors claiming to be victims of the cryptocurrency’s collapse have urged that Do Kwon be extradited to the U.S. In a statement posted online, they argue he will face “proper punishment” in the U.S., owing to the “high possibility” that any sentence imposed in South Korea would be reduced on appeal.

Edited by Stacy Elliott.