Key Points:
- Do Kwon may face the longest-ever jail term in South Korean history if convicted for his involvement in the failed cryptocurrencies TerraUSD and Luna.
- The South Korean prosecutor leading the investigation, Dan Sung-han, believes that extraditing Mr. Kwon to South Korea is the most efficient way to bring justice to investors.
South Korea is vying with U.S. prosecutors to extradite Mr. Kwon from Montenegro. If convicted, Do Kwon would likely face the most extended jail term for a financial crime in South Korean history, more than 40 years. South Korea may hold the upper hand in securing the extradition.
South Korean prosecutors are seeking the extradition of Do Kwon, co-founder of Terraform Labs, the company behind the failed cryptocurrencies TerraUSD and Luna. Since March, Mr. Kwon has been detained in Montenegro and faces charges concerning the cryptocurrency crash that wiped out $40 billion from digital currency markets.
If convicted, he would likely receive the longest jail term for a financial crime in South Korean history, exceeding the 40 years handed out last year for a fraud case involving Seoul-based hedge fund Optimus Asset Management. The launch and subsequent failure of TerraUSD and Luna is described as a “systemic crime.” The South Korean prosecutor leading the investigation, Dan Sung-han, believes that extraditing Mr. Kwon to South Korea is the most efficient way to bring justice to investors.
While some fraudulent actions by the Terraform Labs team occurred in the U.S., most of the crimes Mr. Kwon is accused of happened in South Korea. The prosecution of the case has required identifying and tracking in detail how the business was operated and what types of decisions were carried out.
TerraUSD was a so-called algorithmic stablecoin that worked with its sister coin, Luna, via financial engineering to maintain a value of $1. It lost its dollar peg in May 2022 and tumbled alongside Luna, triggering a crash that wiped out the savings of thousands of investors worldwide.
South Korean prosecutors have accused Mr. Kwon and others involved in Terraform Labs of making false claims about the cryptocurrencies and launching them even though they knew the algorithms underpinning them weren’t feasible.They are also accused of using “trading bots” to produce false transactions of TerraUSD to inflate the perceived demand for the cryptocurrency and maintain its price level, among other charges.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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