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Prosecutors in the United States will seek to challenge Terra co-founder Do Kwon‘s extradition from Montenegro to South Korea, where reports suggest he may face a lighter sentence than if extradited to the U.S.

The U.S. Department of Justice (DOJ) said it will continue to seek the extradition of Kwon Do-hyeong to the U.S., challenging a March 7 decision by a Montenegrin court to extradite the Terraform Labs co-founder to South Korea.

The DOJ pronouncement comes after a Montenegrin high court decided last week that Terraform Labs co-founder Do Kwon would be extradited to South Korea, according to local media, reversing a February 21 decision of another Montenegro court to extradite Do Kwon to the United States.

Kwon appealed his extradition to the U.S., where he is being sought by federal prosecutors for criminal fraud charges, as well as facing civil charges from the Securities and Exchange Commission (SEC) for fraud and violations of securities laws.

Last week, the Korean National Police Agency (KNPA) looked to international law enforcement agency Interpol to support its case, pointing out that South Korea requested Kwon’s extradition first.

Kwon’s defense team had also expressed their preference for him to be sent to South Korea, where he is facing fraud charges, but legal experts suggested he may get an acquittal or light punishment from the South Korean court.

In response to the decision in favor of South Korea, the U.S. DOJ said on Friday it “continues to seek Kwon’s extradition in accordance with relevant international and bilateral agreements and Montenegrin law.”

Terra collapse and Kwon hunt

Terraform Labs collapsed in May 2022 when its TerraUSD (UST) algorithmic stablecoin lost its peg to the U.S. dollar, leading to the printing of more of the company’s native token, LUNA, to prop up UST. This led to a crash in LUNA, and the whole Terra ecosystem came crashing down, with an estimated $60 billion being wiped out of the digital asset space.

In the wake of the fiasco, Kwon disappeared—although he denies this interpretation of his actions—as authorities in his native South Korea issued an arrest warrant for him in September for violating capital market rules with Terraform Labs.

This was promptly followed by the SEC suing Terraform and Kwon in February 2023, accusing them of orchestrating a “fraudulent scheme” and violating securities laws by selling unregistered securities.

Police in Montenegro arrested Kwon as he attempted to board a flight to Dubai, with South Korean police confirming his identity shortly after.

Mere hours after Kwon’s arrest in Montenegro, U.S. federal prosecutors in New York filed charges against him for conspiracy to commit commodities fraud, securities fraud, wire fraud, conspiracy to defraud investors, and engaging in market manipulation.

This sparked a back-and-forth where both South Korea and the U.S. argued with the Montenegrin authorities over who should get the chance to put Kwon on trial first.

In February, a court initially ruled that he was to be extradited to the U.S., but the Montenegro Court of Appeals later revoked this on March 5.

It now appears that South Korea has won the race to prosecute the Terra co-founder.

Kwon’s extradition still awaits final approval from Montenegrin Justice Minister Andrej Milović, but if approved, he will join Terra’s co-founder Shin Hyun-Seung and former finance chief Han Chang-Jun, who are currently being tried in South Korea.

Watch: Probing criminal acts

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