Detention of Do Kwon in Montenegro May Be Prolonged for an Additional Six Months (Report)

The Montenegrin authorities are reportedly contemplating the extension of Do Kwon’s detention in the country for an additional six months prior to making an official determination regarding his potential extradition. Both South Korea, the homeland of the Terraform Labs co-founder, and the United States, the largest economy globally, have requested his removal.

The 31-year-old developer was apprehended by Montenegrin police in March of this year after allegedly evading capture for several months while changing his hiding places. He is facing multiple fraud allegations and is accused of involvement in the collapse of LUNA/UST that occurred last year.

Kwon’s Stay in Europe to Be Extended?

Marija Rakovic, the public relations advisor for the High Court of Montenegro, confirmed to a local news outlet that Kwon has received a six-month detention order. During this time, the judges will determine whether to extradite the former crypto executive to South Korea.

The authorities in South Korea have insisted on his extradition, claiming he played a crucial role in the Terra crash last year, which resulted in multi-billion dollar losses and destabilized the entire digital asset industry.

The United States has also sought Kwon’s extradition. The US SEC previously claimed that Terraform Labs and its co-founder orchestrated a significant crypto fraud by offering and selling unregistered securities through digital currencies.

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American prosecutors have also filed charges, identifying Kwon as the primary individual responsible for the disaster. He is accused of securities fraud, commodities fraud, and conspiracy, with officials calling for appropriate penalties.

Kwon’s legal challenges do not end there. Upon his arrest at Podgorica airport in March, he was found with a counterfeit passport and forged travel documents. A hearing regarding this matter is set to take place in the Basic Court of Podgorica on June 16.

Additionally, Kwon will need to address inquiries about his potential ties to Milojko Spajic, the former Minister of Finance of Montenegro and current leader of the political party Europe Now. The National Security Council revealed that the two had been friends for several years, and Kwon had financed some of Spajic’s political campaigns.

Could the US SEC Drop Charges?

The law firm Dentons, representing Terraform Labs, recently attempted to ease some of Kwon’s difficulties by resolving its legal dispute with the US SEC. The attorneys submitted a motion asserting that UST, the algorithmic stablecoin created by the blockchain company, is not a security, which would warrant the dismissal of the charges by the regulator.

The defense, led by Douglas Henkin, argued that the asset was intended for “practical purposes and commerce, not as an investment.”

“By design … it’s pegged one to one to the dollar; it’s designed not to fluctuate. That’s for commerce … that’s a consumptive use.”

The attorney further compared the stablecoin to Bitcoin, suggesting that UST was “controlled by a decentralized group through the LUNA token.”

Devon Staren, a representative of the SEC, stated that the agency has been “simply enforcing existing laws.” She emphasized that the evaluation of tokens extends beyond the tokens themselves and encompasses the ecosystems they belong to. Staren also commented on LUNA, asserting it is “merely a piece of code.”

Judge Rakoff’s ruling on whether the motion will be accepted or rejected is anticipated in mid-July.

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