A court of appeal in Montenegro confirmed that dethroned cryptocurrency king Do Kwon would be handed over to South Korean authorities, AP reported.
Both the US and South Korea had requested Montenegro extradite Do Kwon. Initially, a court in the Balkan country ruled he would be transferred to the US. Later, this verdict was repealed in favor of South Korea. Do Kwon is not allowed to appeal.
He was accused of fraud in the US
New York prosecutors charged him with fraud, a charge he also faces in South Korea. The date of the handover has not been set. Goran Rodic, Kwon’s Montenegrin attorney, told AP:
We are content with the decision of the Appeals Court. It is now a binding decision and the law envisages that further handover procedure will be handled by the justice ministries of Montenegro and South Korea, as well as the relevant police authorities who will determine the time, location and conditions of the handover.
The rise and fall
Do Kwon is the founder of Terraform Labs’, which issued the LUNA token and the stablecoin TerraUSD. After the tokens crashed, multibillion losses ensued all over the world, and Do Kwon fled. He was on the move for some time before finally being apprehended in Montenegro last year. He and an associate were arrested while trying to leave for Dubai with fake Costa Rican passports. Do Kwon did time in Montenegro for using a fake passport.
Kwon and five associates connected to Terraform are wanted on allegations of financial crimes such as fraud after the digital currencies imploded in May 2022.
TerraUSD was in a 1:1 currency peg with the US dollar to prevent volatility and drastic price fluctuation. However, the stablecoin lost its peg. Its value plummeted, as did that of its sister token LUNA, and token holders across the globe lost $40 billion in total.
What happens next?
Do Kwon will face criminal and possibly civil charges in South Korea over the collapse of his multibillion dollar crypto business. He is also wanted in Singapore. Accusations against him include market manipulation and money laundering.
The punishment
Under the South Korean Criminal Proceeds Regulation Act (CPRA), a person committing any of the following acts faces up to five years in prison and/or a criminal fine of up to KRW30 million, or $22,600:
· misrepresenting the origin of criminal proceeds
· misrepresenting the facts regarding the acquisition or disposition of criminal proceeds
· disguising the criminal proceeds as legitimately acquired property
· concealing criminal proceeds for the purpose of encouraging specific crimes.
The crime that carries the biggest punishment is market manipulation. If Do Kwon is convicted of unfair trading practices, he faces a maximum sentence of life in prison depending on the amount of avoided loss or realized profit. The fine is set according to the following formula:
· KRW500 million if the profits or avoided losses cannot be accurately assessed or if three times the profits or avoided losses is equivalent to KRW500 million or less
· An amount between three and five times the profits or avoided losses from the misconduct.
Punishment for fraud in South Korea depends on the amount of money, the severity of the fraud, and other factors. Do Kwon's fraud offenses are punishable by fine, imprisonment, or both.
Statute of limitations could be his last hope
For many white-collar crimes such as Do Kwon’s, the statute of limitations can be as little as five years, up to 15 years. He is also likely to face a civil suit because victims of property crimes such as fraud, criminal breach of duty, or embezzlement typically file claims in Korean civil courts.
Another factor that could work in Do Kwon's favor is the confusing legislation. Around the time LUNA and TerraUSD imploded, the Parliament of South Korea passed a contentious law limiting prosecutors’ investigative authority to economic crimes and corruption. The law did not specify which government agency would have the power to investigate crimes like those Do Kwon committed. While this issue is being clarified, the statute might lapse.
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