Montenegro court overturns extradition of Terra founder Do Kwon

Do Kwon, the founder of Terraform Labs, the company behind the failed Terra ecosystem, may avoid extradition to the U.S. after a Montenegro court reversed a previous ruling on his case.

The Appellate Court of Montenegro announced on Tuesday that it had quashed the decision of a lower court in Podgorica, which had approved Kwon’s extradition to the U.S. in February. The case has been sent back to the first instance court for a retrial and decision-making, according to the court’s website.

Kwon is wanted by the U.S. and South Korean authorities for his alleged involvement in Terra’s collapse, which resulted in billions of dollars of losses for investors. Terra was a blockchain-based platform that aimed to create a stablecoin pegged to the U.S. dollar, but it suffered a massive hack in June 2022 that drained its reserves and caused its price to plummet.

Kwon fled to Montenegro shortly after the hack, but was arrested in October 2022 on charges of possessing forged documents. He has been in custody ever since, while Montenegro deliberates on his extradition and the competing requests from the U.S. and South Korea.

The Appellate Court said that the reason for the retrial was that “there are no clear and valid reasons for decisive facts regarding the order of arrival of requests” for extradition from the two countries. It is unclear how long the retrial will take and what the outcome will be.

Kwon has denied any wrongdoing and claimed that he was a victim of a cyberattack. He has also appealed to the Montenegrin public and authorities for sympathy and protection, saying that he faces unfair prosecution and possible torture if extradited.

Terra’s collapse has been one of the biggest scandals in the crypto industry, sparking investigations and lawsuits from regulators and investors around the world. The U.S. Securities and Exchange Commission (SEC) has accused Kwon and his associates of conducting an unregistered securities offering and defrauding investors. The South Korean Financial Services Commission (FSC) has also launched a probe into Terra’s operations and its ties to other local crypto firms.

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