Former cryptocurrency entrepreneur Do Kwon has been arrested in Montenegro after several months on the run from authorities.
Kwon, age 31, has been formally charged with fraud by federal prosecutors in New York City after police in Montenegro arrested him as he tried to board a flight using forged Costa Rican travel documents.
He has been charged with fraud over his management of Terraform Labs, the company behind the failed digital currencies Luna and TerraUSD that triggered a meltdown in global cryptocurrencies last year.
Kwon has been charged with eight criminal counts in the U.S., including wire fraud, commodities fraud, securities fraud, and conspiracy to engage in market manipulation.
Until now, Kwon’s whereabouts had been a source of intense online speculation.
Last fall, authorities in Kwon’s native South Korea issued an arrest warrant for him on fraud charges. In September, Interpol, the international police force, issued a “red notice” for Kwon’s immediate arrest.
A graduate of Stanford University in California, Kwon rose to prominence in the crypto world as the founder of Terraform Labs, which issued TerraUSD, a stablecoin that was supposed to be pegged to the U.S. dollar, and Luna, a more traditional cryptocurrency whose value fluctuated.
At one point, Luna had a market capitalization of $40 billion U.S. However, last May the price of Luna declined, setting off a death spiral that brought down TerraUSD as well.
The crash wiped tens of billions of dollars off the global cryptocurrency market in a matter of days. Investors in Luna and TerraUSD lost almost all their money.
In September 2022, South Korean prosecutors charged Kwon and several of his associates with violating the country’s financial and securities laws.
In response to the South Korean arrest warrant, Kwon tweeted that he was willing to cooperate with authorities. But he disappeared shortly afterwards.
In February of this year, the U.S. Securities and Exchange Commission charged Kwon with running “a multibillion-dollar crypto asset securities fraud.”
The U.S. is now reportedly seeking Kwon’s extradition so that he can stand trial in America.
