The co-founder and CEO of Terraform Labs, Do Kwon, may face imprisonment in both the United States and South Korea, as revealed by a senior South Korean prosecutor leading the investigation.
Do Kwon is currently on house bail after he was detained by Montenegrin authorities when he attempted to leave the country using fraudulent documents. Shortly thereafter, the US and South Korean authorities submitted extradition requests for his return to their respective nations.
In an interview with Bloomberg, South Korean prosecutor Dan Sunghan expressed his belief that Kwon’s extradition to South Korea would be the most appropriate course of action in terms of bringing justice to the victims and recovering damages. Sunghan emphasized that most of the initial investigation into the collapse of the Terra ecosystem took place in South Korea, and local authorities have access to more evidence than their American counterparts.
Trial in Two Jurisdictions: A Viable Scenario
When questioned about the possibility of Do Kwon facing trials in both the US and South Korea, Sunghan acknowledged that such a scenario is indeed an option. If South Korean authorities do not address all the charges Kwon faces within the US, it is possible that after serving his sentence in South Korea, Do Kwon could be extradited to the US for prosecution, potentially resulting in a cumulative penalty exceeding 40 years.
According to Sunghan, Kwon’s sentence is expected to be the longest ever handed down in South Korea. The prosecutor described the case as “the largest financial fraud or financial securities fraud case that has ever happened in South Korea.”
Allegations Against Do Kwon and Terra
Do Kwon, alongside Terraform Labs, co-founded Terraform Labs Pte. Ltd., which developed the stablecoin TerraUSD. The collapse of this project in May 2022, involving at least $40 billion, contributed to a significant decline in the cryptocurrency market. The US Securities and Exchange Commission (SEC) has accused Kwon and Terraform Labs of fraud, with subsequent indictments from US prosecutors.
In South Korea, Do Kwon faces charges related to breaches of capital-markets law. Meanwhile, his defense counsels have previously refuted the allegations from US and South Korean prosecutors, asserting that the securities fraud charge in the US is unfounded.