Terraform Labs founder Do Kwon returns to custody in Montenegro for extradition proceedings: report

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Terraform Labs founder Do Kwon could be heading back into custody after the High Court of Montenegro ordered the start of extradition proceedings three weeks after fulfilling bail conditions.

Radio Free Europe (RFE) reported that the court has ordered Kwon back into police custody for six months while authorities mull over extradition requests. South Korea and the U.S. are battling for Kwon’s extradition over the “fraudulent” collapse of the algorithmic stablecoin TerraUSD (UST).

The latest detention order comes one month after Kwon and his accomplice Han Chang Joon secured their release from police custody after meeting bail conditions. The duo paid $436,000 each with terms specifying close police monitoring and a house arrest despite spirited opposition from the prosecution.

Before their release in March, Kwon and his accomplice have been in custody since their arrest at Podgorica Airport after a 12-month-long manhunt. Montenegrin authorities charged the pair with falsification of travel documents, but the recent detention order by the court may see the embattled duo make their defense in custody.

Apart from juggling an extradition battle and falsification charges, Kwon is set to be questioned by the Special State Prosecutor’s Office over his relationship with local politician Milojko Spajic. Authorities are keen on probing Kwon over the contents of a letter suggesting that Kwon may have funded Spajic’s Europe Now Movement (PES).

Investigators say they uncovered evidence of a five-year-long relationship between Spajic and Kwon sufficient enough to trigger an emergency session of the National Security Council. However, Spajic refuted claims of a relationship with Kwon, while the PES described the fiasco as a “dirty affair.”

Shortly after Kwon’s arrest in March, authorities discovered a consulting company registered in Serbia with law enforcement confiscating a $2.2 million apartment in Belgrade. In addition, South Korean authorities announced the seizure of assets worth over $176 million belonging to Kwon in the form of an apartment complex, a fleet of cars, and a sizable amount of securities.

South Korea makes its case for Kwon’s extradition

Experts have opined that South Korea may win the extradition race for Kwon, given the trove of evidence local prosecutors have uncovered against the founder. South Korean prosecutor Dan Sunghan told Bloomberg that Kwon could receive up to 40 years in jail if he is tried in the country.

“This is the largest financial fraud or financial securities fraud case that has ever happened in South Korea,” Sunghan said. “The most efficient way to get justice is to have the investigation and trial take place in South Korea.”

Sungham added that Kwon might be sent to the U.S. to answer for his crimes on the other side of the Pacific after serving out his sentence.

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