Montenegro has approved the extradition of Terraform Labs founder Do Kwon to the U.S., marking a key development in the legal fallout from the $40 billion Terra/Luna collapse.
Montenegro's Justice Minister Bojan Božović announced on Friday that Terraform Labs founder Do Kwon will be extradited to the United States. The decision follows a prolonged legal battle involving competing extradition requests from the U.S. and South Korea. Both nations have sought Kwon’s custody to face criminal charges related to the collapse of the Terra/Luna stablecoin ecosystem in 2022.
Do Kwon, co-founder of Terraform Labs, will be extradited to the U.S. after Montenegro rejected his appeal.
— TFTC (@TFTC21) December 27, 2024
He faces fraud charges tied to the $40 billion collapse of Terra Luna, which caused widespread financial losses. pic.twitter.com/wkgf3gAtzL
Do Kwon was arrested in Montenegro in March 2023 for attempting to leave the country using a forged Costa Rican passport. He was later sentenced to several months in prison on charges of passport forgery. Meanwhile, the U.S. and South Korean governments initiated extradition proceedings, vying for custody to prosecute Kwon for alleged financial crimes stemming from the $40 billion collapse of Terraform Labs.
Montenegro’s courts have issued conflicting rulings over the past year regarding which country should take custody of Kwon. In August 2023, the Appellate Court of Montenegro ruled that Kwon should be extradited to South Korea. However, the Supreme Court’s latest decision found that conditions for extradition to the U.S. had been met, leaving the final decision to the Justice Ministry.
In a detailed statement, Minister Božović outlined the criteria considered in approving Kwon’s extradition to the U.S. “The Ministry of Justice considered all the facts and circumstances, including the gravity of the criminal acts, the place of execution, the order of submission of requests, the citizenship of the requested person, and the possibility of further extradition to another country,” the statement read. The U.S. bid reportedly satisfied these criteria.
Kwon’s legal team in Montenegro criticized the decision, stating they were informed through media reports and arguing that it contradicts previous court rulings favoring South Korea. Lawyers Goran Rodić and Marija Radulović described the move as “illegal” and plan to challenge the ruling.
Kwon faces multiple fraud charges in the U.S. related to Terraform Labs’ algorithmic stablecoin TerraUSD and its sister token Luna. These digital currencies were marketed as stable financial assets but collapsed in May 2022, wiping out $40 billion in market value and leaving retail investors with significant losses. Federal prosecutors in New York have accused Kwon of orchestrating a scheme to defraud investors. South Korean authorities have also issued warrants for Kwon and five other individuals linked to Terraform Labs on similar charges.
The collapse of Terraform Labs triggered a chain reaction of high-profile failures in the cryptocurrency industry, including the downfall of FTX. Analysts view Montenegro’s decision to extradite Kwon to the U.S. as a pivotal moment in the international legal response to cryptocurrency-related financial crimes. The case highlights growing global scrutiny of the cryptocurrency market and its participants.
It remains unclear when Kwon will be extradited to the U.S. or whether further legal appeals will delay the process. As the U.S. prepares to prosecute one of the most controversial figures in cryptocurrency history, the outcome of Kwon’s trial could set a significant precedent for how digital asset crimes are handled in traditional legal systems.
