Terraform Labs Founder Do Kwon Found Guilty of Document Forgery and Sentenced to 4 Months in Jail

CEO and co-founder of Terraform Labs Do Kwon has been found guilty of document forgery and sentenced to a four-month jail term. Kwon was convicted and sentenced by a Basic Court in Podgorica, the capital of Montenegro.

Authorities in Montenegro arrested Do Kwon back in March for carrying fake documents. Law enforcement arrested Kwon and Han Chang-Joon, another executive at Terraform Labs. They have both been in custody since their arrest.

Although the Podgorica High Court had approved bail for the executives, a local news outlet RFE reported that Kwon would remain in custody for six months. The period will see local courts deliberate on whether or not to allow an extradition request from South Korea to take effect. The Podgorica High Court confirmed the news report to CoinDesk.

Like South Korea, the US has also requested an extradition. Both countries want Kwon to answer for the collapse of Terraform Labs, including the LUNA and UST cryptocurrencies.

Bail Conditions Denied for Do Kwon Before Guilty Verdict

Last month, a Basic Court in Podgorica agreed to a bail proposal initiated by Kwon’s attorneys to release the CEO and Chang-Joon. The lawyers proposed a supervised bail, with each person paying 400,000 euros (or $435,000) as the trial progresses. Following the approval, the plaintiff quickly appealed the decision to a High Court in Podgorica, which eventually ruled against the approval.

Notably, the court’s ruling specified that the four-month sentence will include the time the executives already spent in custody. The ruling also instructed authorities to confiscate two Belgian passports, two Costa Rican passports, and two ID cards owned by the two execs.

In September last year, South Korea began searching for Do Kwon and even asked Interpol to issue a “Red Notice” for Kwon. A Red Notice is a call to Interpol to immediately detain a person pending surrender, extradition, or other action. However, Do Kwon declared on Twitter in a thread that he was not guilty of anything and was not on the run. He also said there was no need for anyone to know his precise GPS coordinates, adding that he will defend himself against any accusations.

“I am not ‘on the run’ or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide. We are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months.”

Last May, the National Tax Agency of South Korea found Do Kwon and Terraform Labs guilty of tax evasion and fined them $78 million. According to the agency, Terraform and Do Kwon violated the South Korean Corporate Tax Act, which requires foreign companies to pay tax if managed domestically, regardless of the country of registration. The agency also alleges that before the Terraform crash, Kwon tried to liquidate the company and exit South Korea.