The Montenegro Appeals Court has halted Do Kwon's extradition to South Korea, calling for a retrial in the initial court. This move contradicts the previous High Court ruling. Interestingly, this decision follows a meeting between Montenegro's Justice Minister and the SEC's Director of Enforcement, raising questions about potential influences on the legal proceedings.
Do Kwon's case is now due for a retrial
Do Kwon, the founder of Terraform Labs, faces serious charges related to his company's collapse, which led to approximately $40 billion in investor losses. Terraform Labs marketed TerraUSD as a stablecoin, but both TerraUSD and its sister token, Luna, suffered a catastrophic collapse in May 2022, resulting in significant financial harm to investors.
Terraform Labs sought bankruptcy protection in the US in January to continue operations amidst legal challenges. They aim to fulfill financial commitments to employees and vendors while addressing ongoing legal matters.
For months, Seoul and Washington have been trying to extradite a Do Kwon involved in a fraud case that caused his company's collapse, wiping out $40 billion of investors' money and impacting global crypto markets.
However, Kwon had been evading authorities, fleeing South Korea and Singapore before being arrested in Montenegro in March last year. His business partner, identified as J.C.H., was deported to South Korea in early February.
SEC's Multi-Billion Dollar Penalty
In addition to the legal battles in Montenegro, Kwon and Terraform Labs face hefty penalties from the U.S. Securities and Exchange Commission (SEC). The SEC seeks $4.7 billion in disgorgement and prejudgment interest, plus $520 million in civil penalties. The SEC has also recommended that Kwon be disqualified from serving as a security issuer's officer or director and demanded full disclosure of his financial assets.
Now what?
Meanwhile, the Appeals Court's decision to block Kwon's extradition sends the case back to the first-instance court for a retrial. This development prolongs the legal saga and delays Kwon's return to South Korea to face charges. Meanwhile, the SEC's pursuit of significant penalties continues to loom over Kwon and Terraform Labs, reflecting the severe consequences of their alleged misconduct in the cryptocurrency industry.
