Do Kwon, co-founder of Terraform Labs, was arrested for passport fraud in Montenegro. He has pleaded not guilty to the charges. However, the accused of fraud will face more serious charges in the United States and his home country South Korea.
Bloomberg reports that the court session took place in Montenegro on Thursday. In the session, Do Kwon pleaded not guilty to passport fraud charges. In addition, the former chief financial officer of Terra Labs, Han Chang-joon, also pleaded not guilty.
Both Do Kwon, and Han Chang-joon were apprehended in March at the airport of Podgorica, the capital city of Montenegro. They had been on the run as fugitives for several months and were caught trying to get on a private jet going to Dubai.
Do Kwon Maintains Innocence
According to Bloomberg, they were in possession of fake passports from Costa Rica and Belgium when they got detained. Moreover, they had a legal one from their home country, South Korea.
Interpol and Montenegro later confirmed the legitimacy of the Costa Rica and Belgian passports. However, both men insisted in court on Thursday that the Costa Rican passports were real. The law in Montenegro sentences five years of prison for using fake documents.
Branko Andjelic – their defense attorney suggested releasing them on bail at a price of 400,000 euros (equal to $437,000) for each individual. Furthermore, he proposed that they are subjected to house arrest, suggesting Do Kwon’s girlfriend home.
However, the prosecutor, Haris Sabotic, opposed this idea. He said the two had many financial resources, but it was unlikely that they would stay in Montenegro. Judge Ivana Becic didn’t decide what she would do about the bail. However, she set June 16 as the date of the next meeting.
At the moment, Do Kwon faces charges for hiding $100 million in a Swiss bank. He said he would not run away if the bail were granted.
“I agree to security measures, I will show up when requested,” he said.
Do Kwon – an International Fugitive
From 2022 Do Kwon is known as one of the biggest villains in the cryptocurrency industry, alongside FTX’s Sam Bankman-Fried.
When Terra/Luna collapsed about a year ago, its market value dropped by an incredible $45 billion in just one week. On May 13, Terraform Labs temporarily halted the Terra blockchain. Terraform Labs made TerraUSD (UST) as its stablecoin. In addition, its sister token Luna was the main backing asset and absorbed the instability of TerraUSD. The crisis started when UST stopped being pegged to the US dollar on May 9.
United States prosecutors say that Do Kwon was in charge of a huge cryptocurrency scam that took place over several years and cost at least $40 billion in market value. He will face similar charges in South Korea and could get 40 years in jail. Furthermore, both countries are working hard to get Do Kwon sent back to them from Montenegro. But local officials will only consider handing him over once the case is closed.
There is evidence that the collapse of Terra/Luna caused the whole crypto market to crash in 2022. In November 2021, the blockchain and crypto analytics company Nansen wrote a report about why FTX and Alameda Research collapsed. According to the report, the collapse was caused by the fall of the Terra stablecoin and the liquidity crunch that followed. This first event started a chain of events that led to the collapse of the exchange.
“Piecing together the pieces from our on-chain investigation, it was evident that the Luna/Terra collapse revealed a deep flaw between Alameda and FTX’s muddled relationship. There were significant FTT outflows from Alameda to FTX around the Terra-Luna/ 3AC situation,” the Nansen team wrote.