Terraform Labs Co-founder Do Kwon All Set for Extradition to United States

UTC by Bhushan Akolkar · 3 min read
Terraform Labs Co-founder Do Kwon All Set for Extradition to United States
Photo: Unsplash

Officials in both the United States and South Korea have been vying for jurisdiction over Do Kwon’s fraud allegations. The Terra co-founder’s extradition timeline remains uncertain.

The latest report from Montenegro indicates that Do Kwon, co-founder of Terraform Labs, will soon be sent back to the United States to address charges of fraud.  The Terra co-founder has been facing detention in Montenegro since March 2023.

On Wednesday, February 21, Montenegrin news outlet Pobjeda reported that the High Court of Podgorica has turned down a request to extradite Kwon to South Korea before the US. This is despite arguments from Kwon’s legal team asserting that Montenegro’s Justice Minister holds the ultimate decision-making authority in extradition matters.

Officials in both the United States and South Korea have been vying for jurisdiction over Kwon’s fraud allegations stemming from his tenure at Terraform. Following his arrest in Montenegro, the US Attorney’s Office swiftly filed eight criminal charges against the co-founder of Terra.

However, Kwon’s extradition timeline remains uncertain. Following Terra’s collapse in May 2022, Kwon’s whereabouts remained undisclosed until his arrest in March 2023 for alleged use of counterfeit travel documents.

In June, a court in Montenegro issued a verdict sentencing him to a four-month prison term for document forgery. Despite appealing the initial decision, Kwon lost the appeal, leading to the confirmation of his four-month jail sentence.

Kwon is facing civil charges from the U.S. Securities and Exchange Commission, alleging that he and his company amassed billions from investors through the sale of an array of interconnected crypto asset securities, many of which were unregistered transactions.

The jury rescheduled the trial on the fraud allegations to late March from its initial date of January 29, following challenges in extraditing Kwon from Montenegro, as stated by his lawyer.

Terraform Labs Files for Chapter 11 Bankruptcy

After all the drama over the last two years, Terraform Labs has formally initiated the process of seeking Chapter 11 bankruptcy protection in the United States. According to court filings lodged in Delaware last month, the company’s approximate assets and liabilities are likely to be in the range of $100 million to $500 million. Furthermore, the number of creditors is supposedly between 100 and 199.

Terraform Labs’ CEO, Chris Amani, has asserted that the company’s Chapter 11 bankruptcy filing is a strategic maneuver aimed at bolstering its prospects for contesting a fraud lawsuit brought forth by the United States Securities and Exchange Commission (SEC). Amani underscored the pivotal role of the Chapter 11 filing, emphasizing its importance in maintaining the company’s operational continuity. Besides, it also safeguards value for creditors and stakeholders and facilitates an appeal of the SEC Enforcement Action.

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