South Korea will seek the extradition of crypto fugitive Do Kwon
South Korea will seek the extradition of fugitive crypto entrepreneur Do Kwon, prosecutors told AFP on Friday, after the Terraform founder was arrested in Montenegro and charged with US fraud charges.
Kwon, whose full name is Kwon Do-hyung, has been accused of fraud over the company’s dramatic collapse last year, which wiped out about $40 billion of investors’ money and rocked global crypto markets.
The 31-year-old was arrested at Podgorica airport in Montenegro following a South Korean arrest warrant, the country’s interior ministry said on Thursday.
Soon after, the United States charged him with eight counts, including securities fraud and wire fraud, which followed a lawsuit by the US Securities and Exchange Commission.
In South Korea, where Kwon is wanted for violating the country’s capital markets law, authorities confirmed on Friday that they will demand his extradition.
“South Korean prosecutors will take steps to repatriate Kwon Do-hyung. We are working on the process,” Kim Hee-kyung, a spokeswoman for Seoul’s southern district prosecutors, told AFP.
Kwon is said to have flown from South Korea to Singapore ahead of the company’s crash last May.
In September, South Korean prosecutors requested that Interpol place him on the red alert list across the agency’s 195 member nations, and also revoke his passport.
– Fake Costa Rican passport? –
But questions about his whereabouts intensified after police in Singapore said he was not in the country.
Montenegrin authorities said on Thursday that Kwon had “used forged travel documents from Costa Rica” during passport control for a flight to Dubai.
Inspection of their luggage also found travel documents from Belgium and South Korea, while Interpol checks discovered that Belgian documents were forged, Montenegro’s interior ministry added.
Many investors lost their savings when Kwon’s Luna and Terra entered a death spiral, and South Korean authorities have opened multiple criminal investigations into the crash.
South Korea’s National Police Agency said it would cooperate with the country’s prosecutors in seeking Kwon’s extradition.
– As an organization that works closely with Interpol, we will actively cooperate with the prosecutor’s office in Seoul’s southern district, Jeong Beom-seok, an official from the National Police Agency, told AFP.
South Korea is a member of the European Convention on Extradition, a multilateral convention that facilitates extradition between member nations, and Montenegro is also a signatory, a statement from the Ministry of Justice said.
“The Department of Justice will proceed with the extradition process in accordance with laws and international agreements,” it added.
– “Multi-Billion Dollar Crypto Scam” –
Cryptocurrencies have come under increasing scrutiny from regulators around the world following a series of recent controversies, including the high-profile collapse of the exchange FTX.
Kwon is accused of “orchestrating a multi-billion dollar securities fraud for crypto assets,” according to the US Securities and Exchange Commission.
– It is true that Kwon has done too much damage to too many people, with something that involved many inexplicable risks, Cho Dong-keun, an economics professor emeritus at Myongji University, told AFP.
“It is very unfortunate that he ran away. A responsible adult and entrepreneur would have stayed and explained. The fact that he tried to evade the authorities by using fake passports shows his character.”
His TerraUSD was marketed as a “stablecoin”, which is typically tied to stable assets such as the US dollar to prevent drastic price fluctuations.
But TerraUSD was an “algorithmically stable coin” – not backed by assets, instead only tied to its liquid sister currency Luna. And around $40 billion in market capitalization was wiped out when the two currencies went into freefall in May 2022.
Kwon and Terraform Labs also moved more than 10,000 bitcoins out of their failed project and converted some of the tokens into cash via a Swiss bank, Bloomberg News reported, citing the US SEC.
– Kwon must absolutely be held accountable for his actions, Kim Dae-jong, professor of business administration at Sejong University, told AFP.
“The bottom line is that Kwon did not run the company according to laws and principles. He exploited it for his own personal, financial gain.”
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