Key Points
- Do Kwon, one of the co-founders of Terraform Labs, has received a prison sentence of four months from a Montenegrin court.
- This was due to his attempt to travel with a counterfeit passport.
- Kwon is currently facing charges of fraud in the US and South Korea for a crypto crash that caused a loss of $40 billion for the firm.
Do Kwon, a prominent crypto entrepreneur who previously helmed Terraform Labs, has been convicted of using a counterfeit passport and sentenced to four months in prison by a court in Montenegro. The verdict comes as a significant blow to Kwon’s reputation and could have lasting consequences for his career in the cryptocurrency industry. Despite his past accomplishments and contributions to the field, Kwon’s legal troubles serve as a cautionary tale about the importance of adhering to the law and avoiding fraudulent behavior at all costs.
JUST IN: Do Kwon has been sentenced to 4 months in prison in Montenegro for passport fraudpic.twitter.com/doJv3SqNFJ
— Milk Road (@MilkRoadDaily) June 19, 2023
Do Kwon Facing Jail
Han Chong-joon, Terra’s former finance officer and an associate of Kwon, faced the same charges as Kwon for creating false official documents and was also given a four-month prison sentence. The Montenegro Basic Court website stated that the duration of their detention prior to the trial would be taken into account during the sentencing process.
In March, Do Kwon was arrested at the Podgorica airport in Montenegro while attempting to board a flight to Dubai, amidst allegations of multibillion-dollar fraud in the US and similar charges against him by South Korean authorities. He was taken into custody by local police due to suspected identity fraud.
During his court appearance in Montenegro, LUNA co-founder claimed to be unaware of the alleged forgery and attributed the responsibility to a Chinese agency. He argued that he was holding a Costa Rican “golden passport,” which is a legitimate document that wealthy individuals could obtain to expedite citizenship in specific nations. Nonetheless, the court dismissed this explanation and proceeded to hand down the prison sentences.
In May, Do Kwon, the founder of Terra Labs, was granted bail by a court in Montenegro. However, just two weeks later, the country’s high court overturned the decision, leaving Kwon and Terraform Labs’ CFO, Han Chang-Joon, in legal limbo. But on June 2, a glimmer of hope emerged for the two men. Despite an appeal from the State Prosecutor’s Office, the Montenegrin court decided not to uphold the earlier bail agreement. This meant Kwon and Chang-Joon could await further legal proceedings while under house arrest.
Kwon, a South Korean cryptocurrency entrepreneur, was released on a €400,000 ($436,000) bail while awaiting trial for local charges. The road ahead may be long, but at least for now, Kwon can continue to fight his legal battles from outside a prison cell.
Charges Against Terraform CEO
The Terraform Labs CEO, Do Kwon, is currently at the center of an international legal battle as both South Korean and US officials seek to extradite him. Kwon has been charged with eight criminal indictments by New York prosecutors for defrauding American investors who purchased Terra USD and Luna.
But that’s not all. In February, the US Securities and Exchange Commission (SEC) also accused Kwon of fraud, alleging that he was behind a multibillion-dollar crypto asset securities fraud. According to the SEC, Kwon marketed TerraUSD and a series of other digital assets as profit-bearing securities, promising investors that the tokens would increase in value.
End Note
The consequences of Kwon’s alleged actions have been devastating. Investors globally have lost an estimated $42 billion, and the fallout has shaken confidence in the broader cryptocurrency industry. Several major crypto companies, such as Celsius and Three Arrows Capital, have failed as a result. As the legal battle rages on, the future for Kwon and Terraform Labs remains uncertain. But what is clear is that the impact of this one man’s actions has been felt far and wide, leaving a trail of destruction in its wake.
