Do Kwon, a South Korean national, faces extradition to the US over a $40 billion cryptocurrency crisis. US authorities allege he orchestrated the collapse of two cryptocurrencies, TerraUSD and Luna, triggering a massive crypto sell-off.
Collapse of Terraform Labs
Kwon led Terraform Labs, the company behind the two cryptocurrencies. Luna and TerraUSD gained immense popularity in 2021, earning Kwon a loyal following. Enthusiasts called themselves “Lunatics,” with Kwon hailed as their “king.”
On May 9, 2022, Terraform Labs suffered a catastrophic collapse. The coins lost over 99% of their value within 48 hours, causing panic among investors. The crash wiped out an estimated $400 billion in market value, sparking a broader crypto market decline. Many investors withdrew funds from other cryptocurrencies, fearing a similar disaster.
Terraform Labs filed for bankruptcy in January 2024, marking the end of its operations.
Legal Battles and Extradition
After South Korea issued an arrest warrant, Kwon fled the country, eventually settling in Montenegro. In March 2023, Montenegrin authorities arrested him for attempting to board a flight to Dubai using forged documents. A court in Montenegro found him guilty of document forgery.
Extradition proceedings dragged on due to Montenegro’s lack of treaties with the US and South Korea, which also sought Kwon’s extradition. In December 2024, Montenegro’s Ministry of Justice approved his extradition to the US. Kwon reportedly agreed to the extradition.
US prosecutors accuse Kwon of orchestrating a massive crypto asset securities fraud. His extradition to the US concludes an 18-month legal process, setting the stage for criminal proceedings.
Bitcoin and other cryptocurrencies have rebounded since the crash, with Bitcoin briefly surpassing $100,000 per coin in December. However, the memory of the “cryptocrash” lingers, highlighting the risks of the volatile crypto market.
