Do Kwon, the Crypto Fugitive, led a very public life while on the run

Not long after the South Korean government issued a warrant for his arrest, Do Kwon, the cryptocurrency entrepreneur turned fugitive, joined a live stream with two popular crypto podcasters.

They had arranged for Mr. Kwon to speak with Martin Shkreli, the former pharmaceutical executive who was sentenced to seven years in prison for fraud. “Hey, do it,” Mr. Shkreli said on the stream in November. “I just wanted to tell you that prison isn’t so bad. It’s not the worst thing ever.”

Mr. Kwon smiled and nodded. “Good to know,” he said.

On Thursday, Mr. Kwon, 31, was arrested in Podgorica, the capital of Montenegro, as he and a travel companion attempted to board a private plane to Dubai, United Arab Emirates. They were arrested after using fake Costa Rican passports, according to authorities, and they also carried travel documents from Belgium that appeared to be forged.

The arrest was the culmination of a remarkable story of international intrigue and chutzpah in the crypto industry. Mr. Kwon became a target of criminal investigators in at least three countries after two cryptocurrencies issued by his company, Terraform Labs, collapsed virtually overnight.

The crash set off a market meltdown that pushed back the prices of popular digital coins like Bitcoin and Ether and sent the crypto industry into crisis. In just a few days, Mr. Kwon went from industry notable to industry villain. Some investors in his virtual currencies lost their savings.

After his business collapsed, Mr. Kwon traveled around Europe and Asia, from Singapore to Serbia to Montenegro, insisting on Twitter that he was not “on the run” or anything like that.

Even as global authorities sought his arrest, Mr. Kwon gave interviews to journalists and podcasters, and he tried to revive his crypto business with a new digital coin. In a brief conversation with The New York Times early this month, Kwon said he had not “declined requests” to share his location with authorities.

“They obviously know where I am,” he said.

His arrest is now poised to start a battle for his extradition. On Thursday, federal prosecutors in the Southern District of New York charged Mr. Kwon with eight counts of fraud. Authorities in his native South Korea have also accused him of financial crimes.

South Korea plans to “move forward with the extradition process in accordance with the law and international agreements,” the country’s justice ministry said in a statement on Friday.

A year ago, Mr. Kwon was one of the richest and most powerful figures in the crypto industry. After graduating from Stanford University with a degree in computer science, he started Terraform Labs, which issued two closely linked digital currencies: TerraUSD, a stablecoin with a price of $1, and Luna, a more traditional cryptocurrency with a fluctuating value.

TerraUSD was designed to maintain the value of $1 through financial development linking it to Luna. The coins became very popular and the value of all Lunas in circulation climbed to $40 billion as the crypto market boomed in 2021 and early 2022.

Mr. Kwon cultivated a brash persona on Twitter, dismissing critics with tweets such as “I don’t debate the poor.” His passionate followers called themselves “lunatics”. One of his prominent venture capital backers, Mike Novogratz, even had one Luna themed tattoo of a wolf howling at the moon.

Then Mr. Kwon’s business crashed. In May, the price of Luna fell sharply, which brought TerraUSD down with it. The implosion wiped out tens of billions of dollars in value and caused a domino effect that led to the collapse of major crypto companies including FTX, the exchange founded by Sam Bankman-Fried.

Soon Mr. Kwon was the target of criminal investigations. In September, South Korean prosecutors charged him and five others with violating the country’s financial laws. Interpol, the international police organization, issued a “red notice” demanding his arrest. Police in Singapore also said they were investigating Mr. Kwon.

According to the Interpol office in Seoul, Mr Kwon arrived in Singapore in April last year, before going to the United Arab Emirates in September, the month South Korea issued the warrant for his arrest. Investigators believed the trip to the Emirates was a stop on the way to Serbia, where Kwon had been hiding with Han Chang-joon, Terraform’s former CFO.

Even after Luna’s epic collapse, Mr. Kwon believed he could make a comeback in the crypto industry and unveiled a new digital coin. He told an acquaintance that he aimed to make his coin one of the 10 most valuable cryptocurrencies, without tying it to a stablecoin, according to a person familiar with his thinking.

After Mr. Bankman-Fried’s company collapsed, Mr. Kwon began posting frequently on Twitter. On Dec. 7, he linked to a Times article reporting that the Justice Department was investigating whether Mr. Bankman-Fried had engaged in market manipulation that caused Luna’s collapse.

“What is done in darkness will come to light,” he wrote.

In the recent conversation with The Times, Mr. Kwon said he had launched some open-source projects, using a term that usually refers to software built on code that has been made publicly available. “I call it, for example, technology philanthropy,” he said. “It doesn’t really have business models or tokens or anything like that.”

But the pressure on him grew. In February, the Securities and Exchange Commission charged him with orchestrating a multibillion-dollar securities fraud. Privately, he confided that he was having a midlife crisis and that he spent too much time thinking and not enough coding, according to the person familiar with his thinking.

Mr. Kwon arrived in Montenegro about 10 days ago, said Dritan Abazovic, the country’s prime minister. On Thursday, he went to the airport with Mr. Han, his Terraform colleague. They presented passports from Costa Rica, which immigration checks revealed were fakes.

Montenegrin police arrested Mr. Kwon and Mr. Han at 9 a.m. local time and notified the Interpol agency in Seoul, asking for confirmation that they had correctly identified them, according to the statement from South Korea’s Justice Ministry. A fingerprint confirmed their identity.

During the arrest, the Montenegrin authorities confiscated the travel documents, as well as several mobile phones.

“Montenegro really gives a lot of support to fight against all kinds of criminals,” Abazovic said in an interview on Friday. “It is our duty to try to work with other partners.”

Mr. Kwon spent Thursday night in police custody. After his arrest, he was photographed being led into a police vehicle in Montenegro, wearing a gray Nike sweatshirt and sweatpants. He was scheduled to appear in court Friday night, according to his local attorney, Branko Andelic. A representative for Mr. Kwon and Terraform Labs did not respond to a request for comment.

The next step in the case will likely involve extradition, a complex legal process that can sometimes take months to unfold. Nick Biase, a spokesman for the US attorney’s office for the Southern District of New York, said US prosecutors were seeking Mr Kwon’s extradition. The South Korean government said on Friday it also plans to extradite Mr Kwon.

“We will see what is the first request and after that we are ready to extradite him to the country that is looking for him,” Abazovic said in the interview.

Whatever Mr. Kwon’s ultimate fate, news of his arrest was met with celebrations in the crypto community, where he has become a deeply unpopular figure since the collapse of Luna and TerraUSD.

“I’ve been waiting for this moment for a long time,” tweeted an account that has attempted to mobilize victims of the Luna crash.

Alisa Dogramadzieva contributed reporting.