Kwon Do-hyeong, also known as Do Kwon, the disgraced former cryptocurrency boss behind the $40bn (£31.3bn) collapse of the terraUSD and Luna tokens, has been sentenced to four months of jail in Montenegro after being found guilty of forging official documents. And he also faces charges in the United States and South Korea over the collapse of the two digital tokens last year.
He was arrested in March as he tried to board a flight to Dubai at Podgorica Airport, in the country’s capital. Authorities found and confiscated two Costa Rican passports, two Belgian passports, and two identity cards from the former crypto executives. Their sentences include the 85 days they spent in detention, the court said in a statement.
Terraform Labs was behind the TerraUSD stablecoin and its sister coin Luna. Both coins lost their value in a matter of days in May 2022, wiping about $40 billion from the crypto market and setting off panic across the sector.
The former finance officer of Mr. Kwon’s company Terraform Labs, Han Chang-Joon, was also sentenced to four months in prison after being found guilty of the same charges. Kwon and Han pleaded not guilty at their first court hearing in May.
The sentences will include the time that Kwon and Han has already spent in detention after being arrested in March, the court said in a statement. They will also be able to appeal the verdict within eight days of receiving written notification from the court.
In February, the US Securities and Exchange Commission charged Kwon and his company with defrauding investors, saying he had misled investors about the stability of TerraUSD.
“We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for Luna and TerraUSD,” US Securities and Exchange Commission (SEC) chairman Gary Gensler said in a statement.
Last year, a South Korean court issued arrest warrants for Kwon and five other individuals connected to the case. Prosecutors said they believed that Terraform Labs, which is registered in Singapore, had violated capital market rules.
Prosecutors in Seoul said in December that the crypto boss was believed to be hiding out in Serbia. Kwon has repeatedly claimed on Twitter that he is not “on the run,” but refused to disclose his whereabouts, citing worries about his personal security.
I am not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide
— Do Kwon(@stablekwon) September 17, 2022
Montenegro does not have extradition treaties with the US or South Korea.
The collapse of the terraUSD stablecoin and the associated Luna token rocked cryptocurrency markets in May 2022, wiping about $40 billion from the crypto market and setting off panic across the sector.
