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Ex-Terraform Labs CFO extradited to South Korea over $60 billion crypto scam

Han Chang-joon, the former chief financial officer of Terraform Labs, the company behind the Terra stablecoin project, has been extradited to South Korea to face charges of fraud and market manipulation, according to the Montenegrin police.

Han was arrested in March 2023 along with Terraform Labs co-founder and CEO Do Kwon at the Podgorica airport in Montenegro, where they were trying to flee the country using fake passports. They were wanted by both US and South Korean authorities for their alleged involvement in the collapse of the Terra stablecoin ecosystem, which resulted in losses of over $60 billion for investors and users in May 2022.

The Montenegrin Ministry of Justice decided to extradite Han to South Korea after he completed his four-month prison sentence for using forged documents. The police said Han was handed over to South Korean officials on Monday morning, who will initiate criminal proceedings against him for several offences related to fraud in financial investment services, investments and the capital market. Han could face life imprisonment if convicted in South Korea.

The fate of Do Kwon, however, remains uncertain, as his lawyer Goran Rodic said they are still waiting for the decision on his extradition request, which has been appealed by both the US and South Korea. Rodic said Kwon denies any wrongdoing and claims he was unaware of Han’s actions.

The Terra stablecoin project was launched in 2018 by Terraform Labs, a Singapore-based company, with the aim of creating a family of algorithmic stablecoins pegged to various fiat currencies, such as the US dollar, the Korean won, and the Mongolian tugrik. The project claimed to use a sophisticated mechanism to adjust the supply and demand of the stablecoins, as well as a governance token called LUNA, which was used to collateralize the stablecoins and vote on protocol changes.

The project attracted millions of users and investors, especially in Asia, where it partnered with several e-commerce platforms and payment services. At its peak, the Terra stablecoin ecosystem had a market capitalization of over $70 billion, making it one of the largest and most successful crypto projects in the world.

However, in May 2022, the project suffered a catastrophic failure, as a series of technical glitches, security breaches, and market manipulations caused the stablecoins to lose their pegs and plummet in value, triggering a massive sell-off and panic among users and investors. The LUNA token also crashed by more than 90%, wiping out billions of dollars in value.

The US and South Korean authorities launched investigations into the project, suspecting that it was a fraudulent scheme orchestrated by Terraform Labs executives, who allegedly siphoned off funds from the project and manipulated the market using fake transactions and bots. Han and Kwon were identified as the main suspects and accused of fraud, money laundering, and securities violations.

The extradition of Han marks a major development in the case, as he is expected to face trial and provide evidence on the inner workings of the project and the role of Kwon and other Terraform Labs employees. The case could also have significant implications for the crypto industry, as it raises questions about the viability and regulation of algorithmic stablecoins and decentralized finance (DeFi) platforms.

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