Do Kwon's detention extended by Montenegro court for six months

The disgraced Terraform Labs CEO will serve another six months in a Balkan state prison while awaiting an extradition trial.

A Montenegro court has extended Do Kwon’s detention by six months as he awaits a possible extradition trial, AFP reported on Thursday.

The former Terraform Labs CEO has been detained in Montenegro since late March after he was arrested at the airport in the country’s capital, Podgorica, on suspicion of carrying forged travel documents. He faces two separate criminal cases in Montenegro: one related to alleged possession of forged documents and another related to his possible extradition.

Both South Korea and the United States are seeking the extradition of Kwon for his alleged involvement in fraud related to the dramatic collapse of his company last year. The incident cost investors an estimated $40 billion and sent shockwaves through the global cryptocurrency market.

South Korean entrepreneur Do Kwon founded Terraform Labs, the company behind TerraUSD (UST), a stablecoin that was supposed to maintain parity with the U.S. dollar. The stability of UST is purportedly ensured by a balanced arbitrage mechanism with LUNA, another more speculative cryptocurrency in the ecosystem.

However, in May 2022, UST lost parity with the U.S. dollar, triggering a cascading effect that collapsed the Terra ecosystem almost overnight and wiped billions from the market. In the months following Terra’s debacle, other major players in the industry, including Celsius, Voyager, BlockFi, and eventually FTX, failed.

A South Korean court issued an arrest warrant for Kwon in September 2022; in the same month, Interpol issued a red notice for Kwon, calling for global law enforcement to arrest him immediately. Kwon was finally arrested in Montenegro on March 23 of this year; the next day, he was charged with multiple crimes by US law enforcement.

Quan’s arrest and continued detention have fueled political controversy in Montenegro. During the recent parliamentary elections, interim prime minister Dritan Abazovic and his allies accused Europe Now leader Milojko Spajic of having links to Kwon. The allegations may have affected Europe Now’s performance in the polls, leading the party to struggle to form a coalition.