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Terraform Labs founder, Do Kwon, receives jail sentence

June 20, 2023
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Terraform Labs founder, Do Kwon, has been sentenced to four months in prison in Montenegro on charges of forging official documents. He was arrested in late March while attempting to travel to Dubai with fake Costa Rican passports. Kwon and Terraform Labs' former finance officer, Han Chang-joon, who was also charged and sentenced, are wanted in the U.S. and South Korea for a scheme that caused a $40 billion loss for investors when the company's cryptocurrency crashed.

Arrest and Charges: Do Kwon, the founder of Terraform Labs, has been arrested and sentenced in Montenegro on charges of forging official documents.
  • Kwon and the former finance officer of Terraform Labs, Han Chang-joon, were trying to board a flight to Dubai when they were arrested with fake Costa Rican passports.
  • They were also found in possession of forged Belgian passports and computers that are sought by the South Korean and U.S. authorities.

  • Cryptocurrency Collapse: The cryptocurrency developed by Terraform Labs resulted in significant financial losses for investors.
  • TerraUSD and Luna, marketed as stablecoins pegged to the U.S. dollar, collapsed in May 2022.
  • The collapse led to many investors losing their life savings and filing complaints, accusing Kwon of running a Ponzi scheme.

  • International Warrants and Charges: Kwon is wanted by law enforcement in both South Korea and the United States.
  • South Korea issued an arrest warrant against Kwon and five associates last September.
  • The U.S. Securities and Exchange Commission charged Kwon with failing to provide the public with full, fair, and truthful disclosure for various crypto asset securities, most notably for LUNA and Terra USD.

  • Extradition Possibilities: Despite Montenegro not having extradition treaties with the U.S. or South Korea, the idea of extradition is still being considered.
  • The four-month jail sentence follows an extension of Kwon's custody stay by Montenegrin authorities, as they decide how to proceed with the extradition requests from the U.S. and South Korea.
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