Crypto fugitive Do Kwon arrested in Montenegro after $40B TerraUSD collapse
Do Kwon, the fallen crypto kingpin who oversaw the catastrophic $40 billion collapse of two digital currencies final yr, was arrested in Montenegro on Thursday and slapped with contemporary fraud fees within the US.
Kwon, the 31-year-old co-founder of Terraform Labs, was apprehended on the airport within the Balkan nation’s capital of Podgorica whereas making an attempt to board a flight to Dubai.
Native police mentioned Kwon and a second suspect – identified by Bloomberg as Terraform CFO Han Chang Joon – had been carrying cast Costa Rican and Belgian passports on the time of their arrests.
It’s unclear if Montenegrin police arrested Kwon on the behest of the US Justice Division.
The feds unveiled a slate of eight fees towards him, together with fraud and market manipulation, associated to the gorgeous wipeout of the TerraUSD stablecoin and its interlinked sister cryptocurrency, Luna, final yr.
The indictment alleges that Kwon deceived traders and prospects with false and deceptive statements about Terra’s expertise and product choices.
Mark Califano, a US lawyer for Kwon, didn’t instantly return a request for remark.
Federal prosecutors signaled they are going to extradite Kwon to face fees, Bloomberg reported. Kwon additionally has been wished for arrest in South Korea since final September.
The Securities and Trade Fee had already filed civil fees towards Kwon and Singapore-based Terraform Labs final month, accusing the manager of “orchestrating a multi-billion greenback crypto asset securities fraud involving an algorithmic stablecoin and different crypto asset securities.”
Native police mentioned Kwon and a second suspect – identified by Bloomberg as Terraform CFO Han Chang Joon – had been carrying cast Costa Rican and Belgian passports on the time of their arrests.
Kwon had touted TerraUSD, the worth of which was pegged to the US greenback, as a secure various to extra risky cryptocurrencies. However the worth of each TerraUSD and free-floating Luna cratered final Might after a sudden disaster of confidence led traders to dump their holdings.
The cryptocurrency bloodbath erased $40 billion or extra in market worth in a matter of days. The circumstances that led to the collapse are nonetheless unclear.
Kwon’s arrest comes as US authorities crack down on alleged dangerous actors within the crypto sector following a sequence of high-profile incidents that damage public traders.
The downfall of TerraUSD and Luna contributed to a domino impact that has worn out numerous different cryptocurrency entities during the last yr – together with disgraced Sam Bankman-Fried’s doomed platform, FTX.
Since late final yr, the feds have investigated whether or not Bankman-Fried engaged in illicit trading activity to drive down the costs of TerraUSD and Luna, the New York Occasions reported in December.
Simply earlier than their crash, merchants reportedly seen “a flood of promote orders” for TerraUSD that “overwhelmed the system” and contributed to their speedy implosion.
A lot of the promote orders purportedly originated from Alameda Analysis, the now-shuttered cryptocurrency hedge fund owned by Bankman-Fried and as soon as run by his ex-girlfriend, Caroline Ellison.
Bankman-Fried is presently beneath home arrest whereas awaiting trial on fraud fees for his alleged function in bilking FTX prospects forward of his agency’s chapter. He faces as much as 115 years in jail.
With Submit wires