Crypto fugitive Do Kwon arrested in Montenegro months after $40B TerraUSD collapse

Do Kwon, the fallen crypto kingpin who oversaw the catastrophic $40 billion collapse of two digital currencies last year, was arrested in Montenegro on Thursday and slapped with fresh fraud charges in the US.

Kwon, the 31-year-old co-founder of Terraform Labs, was apprehended at the airport in the Balkan country’s capital of Podgorica while attempting to board a flight to Dubai.

Local police said Kwon and a second suspect – identified by Bloomberg as Terraform CFO Han Chang Joon – were carrying forged Costa Rican and Belgian passports at the time of their arrests.

It’s unclear if Montenegrin police arrested Kwon at the behest of the US Justice Department.

The feds unveiled a slate of eight charges against him, including fraud and market manipulation, related to the stunning wipeout of the TerraUSD stablecoin and its interlinked sister cryptocurrency, Luna, last year.

The indictment alleges that Kwon deceived investors and customers with false and misleading statements about Terra’s technology and product offerings.

Mark Califano, a US attorney for Kwon, did not immediately return a request for comment.

Do Kwon
The Terraform Labs co-founder is also wanted for arrest in South Korea.

Federal prosecutors signaled they will extradite Kwon to face charges, Bloomberg reported. Kwon also has been wanted for arrest in South Korea since last September.

The Securities and Exchange Commission had already filed civil charges against Kwon and Singapore-based Terraform Labs last month, accusing the executive of “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”

Kwon had touted TerraUSD, the value of which was pegged to the US dollar, as a stable alternative to more volatile cryptocurrencies. But the value of both TerraUSD and free-floating Luna cratered last May after a sudden crisis of confidence led investors to dump their holdings.

Do Kwon
Do Kwon faces various fraud charges in the US.

The cryptocurrency bloodbath erased $40 billion or more in market value in a matter of days. The circumstances that led to the collapse are still unclear.

Kwon’s arrest comes as US authorities crack down on alleged bad actors in the crypto sector following a series of high-profile incidents that hurt public investors.

The downfall of TerraUSD and Luna contributed to a domino effect that has wiped out various other cryptocurrency entities over the last year – including disgraced Sam Bankman-Fried’s doomed platform, FTX.

Do Kwon
TerraUSD and Luna became essentially worthless last year.

Since late last year, the feds have investigated whether Bankman-Fried engaged in illicit trading activity to drive down the prices of TerraUSD and Luna, the New York Times reported in December.

Just before their crash, traders reportedly noticed “a flood of sell orders” for TerraUSD that “overwhelmed the system” and contributed to their rapid implosion.

Do Kwon
Do Kwon is accused of misleading investors and customers.

Most of the sell orders purportedly originated from Alameda Research, the now-shuttered cryptocurrency hedge fund owned by Bankman-Fried and once run by his ex-girlfriend, Caroline Ellison.

Bankman-Fried is currently under house arrest while awaiting trial on fraud charges for his alleged role in bilking FTX customers ahead of his firm’s bankruptcy. He faces up to 115 years in prison.

With Post wires

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