Do Kwon’s Detention in Montenegro Could be Extended by Another 6 Months (Report)

The authorities of Montenegro reportedly consider extending Do Kwon’s custody in the country for another six months before taking an official decision on his possible extradition. The homeland of Terraform Labs’ co-founder – South Korea – and the world’s biggest economy – the United States of America – have both requested his deportation.

The Montenegrin police arrested the 31-year-old developer in March this year after he was supposedly on the run for several months, changing multiple hiding locations. He faces numerous fraud charges and is accused of having a hand in last year’s LUNA/UST collapse. 

Kwon’s Stay in Europe to Be Extended?

Marija Rakovic – adviser for public relations of the High Court of Montenegro – confirmed to a local media outlet that Kwon received a detention order of half a year. During that period, the magistrates will decide whether to extradite the former crypto tycoon to South Korea. 

The authorities of the Asian country have insisted on his deportation, alleging he played a significant role in the Terra crash last year that prompted multi-billion dollar losses and undermined the entire digital asset sector. 

The USA has also requested Kwon’s extradition. The US SEC previously asserted that Terraform Labs and its co-founder had orchestrated a massive crypto scam by offering and selling unregistered securities through the use of digital currencies. 

American prosecutors pressed charges, too, labeling Kwon as the main culprit behind the catastrophe. The officials accused him of committing securities fraud, commodities fraud, as well as conspiracy and demanded a proper punishment.

The legal problems for the South Korean do not stop here. Upon his arrest at the Podgorica airport in March, he was carrying a falsified passport and forged travel documents. A hearing on the matter held in the Basic Court of Podgorica is scheduled for June 16. 

In addition, Kwon will have to answer questions regarding his possible connection with Milojko Spajic – former Minister of Finance of Montenegro and current leader of the political party Europe Now. The National Security Council disclosed that the individuals had been friends for years, and Kwon financed some of Spajic’s political campaigns.

Could the US SEC Drop Charges?

The law firm Dentons, which represents Terraform Labs, recently tried to alleviate some of Kwon’s troubles by eliminating its legal battle with the US SEC. The attorneys filed a motion, claiming that UST (the algorithmic stablecoin developed by the blockchain firm) is not a security, meaning the regulator should dismiss charges. 

The defense, represented by Douglas Henkin, maintained the asset was designed for “practical purposes and commerce, not as an investment.” 

“By design … it’s pegged one to one to the dollar; it’s designed not to fluctuate. That’s for commerce … that’s a consumptive use.”

The attorney went further, comparing the stablecoin to Bitcoin, suggesting UST was “controlled by a decentralized group through the LUNA token.”

Devon Staren – a representative of the SEC – said the agency has been “simply enforcing existing laws.” She noted that the analysis of tokens expands beyond them and touches upon the ecosystems they are part of. Staren also gave her two cents on LUNA, claiming it is “merely a piece of code.”

Judge Rakoff’s decision on whether the motion will be approved or dismissed is expected in mid-July.