The South Korean founder of the cryptocurrency Terra, Do Kwon, was charged with falsifying documents and remanded in custody on Friday in Montenegro pending his possible extradition.
Do Kwon, whose full name is Kwon Do-hyung, was arrested at Podgorica airport on Thursday along with his chief financial officer, Hon Chang Joon.
Mr Kwon, 31, is the founder of Terraform Labs, parent company of the "stable cryptocurrency" Terra which collapsed in May 2022.
He is accused of fraud in this crash which caused investors to lose around 40 billion dollars (37 billion euros).
Referring to the arrest of "a person suspected of being one of the most wanted fugitives in the world", the Montenegrin Minister of the Interior, Filip Adzic, said Thursday that the two men had been arrested because of a South Korean arrest warrant issued against them.
According to the Montenegrin authorities, they held "falsified Costa Rican documents" during a check before a flight which was to take them to Dubai. Inspection of their luggage also revealed falsified Belgian documents.
On Friday, police in Montenegro announced that the two had been charged with falsifying documents. The founder of Terra has denied being in possession of false documents, his lawyer Branko Andjelic told AFP.
The two men were remanded in custody for up to 30 days "due to the risk of absconding", according to a statement from the Podgorica court.
In South Korea, where Do Kwon is wanted for violating financial market rules, the prosecution had previously announced that it would "take measures to repatriate Kwon Do-hyung".
"We are working on it," Kim Hee-kyung, a spokeswoman for the South Seoul prosecutor's office, told AFP.
South Korea's National Police Agency told AFP it would work with prosecutors in Montenegro to organize Do Kwon's extradition.
But the latter should not appear before the High Court in Podgorica for his possible extradition before the holding of his trial for falsification of documents, according to a court official.
Shortly after his arrest, a US federal jury brought eight counts against Do Kwon, including stock fraud and online fraud.
According to the US Securities and Exchange Commission (SEC), the 30-year-old is accused of having “orchestrated a multi-billion dollar crypto asset fraud”.
Do Kwon is suspected of having fled South Korea for Singapore at the time of the May 2022 crash.
In September, South Korean prosecutors asked Interpol to issue a red notice against him in the organization's 195 member countries and canceled his passport.
South Korea is, like Montenegro, a member of the European Convention on Extradition, an agreement which facilitates extraditions between signatory countries, the Ministry of Justice explained in a press release. He "will follow the extradition procedure in accordance with the laws and international agreements".
Cryptocurrencies have come under increasing scrutiny since series of crashes, controversies and the bankruptcy of FTX, one of their most important exchanges.
Many investors lost all their life savings when cryptocurrencies Terra and Luna, founded by Mr. Kwon, collapsed. The South Korean authorities then opened several criminal investigations.
"It is true that Kwon did too much harm to too many people, with something that had a lot of unexplained risks," Cho Dong-keun, professor emeritus of economics at Myongji University in Seoul, told AFP. .
In principle, a so-called stable cryptocurrency, or "stablecoin", guarantees more stability to investors in this very volatile universe.
Its course can be backed by that of a traditional currency or by tangible assets, but that was not the case with Terra which was linked to another crypto-asset developed by the Luna Foundation Guard of which Mr. Kwon is also a founder. .
The prices of the stablecoin Terra and its twin token Luna very quickly fell to zero after the tumble in mid-May 2022.
According to Bloomberg News, citing the SEC, Mr. Kwon and Terraform Labs also mined more than 10,000 bitcoins from their bankrupt project and converted some into cash through a Swiss bank.
24/03/2023 20:23:29 - Podgorica (Monténégro) (AFP) - © 2023 AFP
