Terraform Labs co-founder Do Kwon arrested in Montenegro

BLOCKCHAIN

Police in Montenegro have apprehended Do Kwon, the co-founder and former Chief Executive Officer of cryptocurrency company Terraform Labs Pte Ltd.

Montenegro’s interior ministry announced the arrest today in a statement obtained by Bloomberg. According to the statement, Kwon was arrested at an airport in the capital of Podgorica while attempting to board a flight to Dubai. He reportedly tried to use falsified Costa Rican traveling documents. 

Terraform Labs developed TerraUSD and Luna, two once-popular cryptocurrencies that collapsed last year. The company marketed TerraUSD as a stablecoin pegged to the U.S. dollar. The process of minting the stablecoin involved deleting Luna tokens, which were also managed by Terraform Labs. 

Last May, the value of TerraUSD fell below the U.S. dollar despite Terraform Labs’ promise that price parity would be maintained. The price drop sent the market capitalization of Luna plummeting. The implosion of the two coins, which were at one point worth $60 billion, ultimately erased a half-trillion dollars from the market value of the cryptocurrency sector. 

Last September, South Korean authorities issued an arrest warrant for Kwon over alleged violations of the nation’s capital markets law. He reportedly went into hiding to evade arrest. The Interpol subsequently issued a red notice, a request asking law enforcement agencies worldwide to locate and apprehend the Terraforms Labs co-founder. 

At one point prior to Kwon’s arrest today, he was believed to be hiding in Serbia. Last year he reportedly denied he was on the run. 

“The former cryptocurrency king who is behind losses of over $40 billion, has been apprehended at the Podgorica airport with forged documents,” Montenegrin Interior Minister Filip Adzic stated in a tweet translated by Reuters. “The same person is being sought by South Korea, the United States and Singapore.”

In addition to the charges brought by South Korean prosecutors, Kwon is facing a civil lawsuit from the U.S. Securities and Exchange Commission. The SEC is accusing Kwon of orchestrating a “multibillion-dollar crypto asset securities fraud.” According to the agency, Kwon misled investors about the stability of Terraform Labs’ TerraUSD cryptocurrency and falsely claimed it was adopted by a popular mobile payment platform.

Earlier this month, the Wall Street Journal reported that the U.S. Justice Department is also investigating the collapse of TerraUSD. Officials are said to have questioned several former employees of Terraform Labs in connection with the probe. It’s believed the investigation could lead to criminal charges against Kwon. 

Photo: Terraform Labs