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  • K Kim and S Pettigrove

Crypto fugitive Do Kwon arrested

Do Kwon, the co-founder and CEO of Terraform Labs, the backers of the collapsed Luna and TerraUSD cryptocurrencies, was reportedly arrested in Montenegro on Thursday, 23 March. Kwon was detained at the Podgorica airport for allegedly possessing a fake Costa Rican passport. His South Korean passport was revoked previously by South Korean prosecutors in October 2022.

In response to Montenegro's interior minister Filip Adzic's announcement, public agencies rushed to verify the identities of the arrested suspects, with the National Police Agency of South Korea confirming Do Kwon's identity on Friday after fingerprints matched official records. It has been reported that officials are arranging to repatriate Do Kwon to South Korea while US authorities are seeking his extradition.

Following the $40 billion collapse of Luna and the TerraUSD stablecoin in May last year, Do Kwon and five others have been pursued by authorities in Singapore, South Korea and the United States. The meltdown not only caused detriment to investors but rapidly undermined public confidence in cryptocurrency markets, contributing to the downfall of companies including Celsius and Three Arrows Capital.

Interpol, an international police organization, issued a red notice in September, requesting global authorities' cooperation in the arrest of the fallen ‘cryptocurrency king’. Police authorities in Singapore are also known to be investigating Do Kwon’s Singapore based company, Terraform Labs.

The US Securities and Exchange Commission has charged Do Kwon with securities fraud, alleging that Do Kwon and his company Terraform Labs:

Failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for Luna and TerraUSD.

Following the unsealing of an indictment by the US Attorney for the Southern District of New York last week, Do Kwon now faces eight additional criminal charges including securities, commodities and wire fraud and conspiracy to commit fraud and market manipulation concerning allegedly misleading claims relating to an earlier de-pegging incident in May 2021. US authorities allege that a US based firm intervened at that time to restore the TerraUSD peg, which Kwon failed to disclose, implying that the algorithm which purportedly underpinned the peg had operated as planned.

Do Kwon has consistently denied allegations of fraud through his Twitter account (bearing its now ironic handle @stablekown) and in public interviews, commenting:

I've stolen no money and never had 'secret cashouts'...


There is a difference between failing and running a fraud.

While the authorities prolonged chase draws closer to an end, legal representatives of Do Kwon and Terraform Labs did not respond to requests for comment. It remains to be seen whether Do Kwon will take his public defence over the failure of Luna and the Terra ecosystem to the Courts.


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