Do Kwon, the South Korean entrepreneur who co-founded Terraform Labs, the company behind the collapse of the cryptocurrencies TerraUSD and Luna, has been arrested in Montenegro for fraud and other charges. The arrest occurred on the same day that the US Department of Justice (DOJ) announced eight charges against Kwon, including securities fraud, wire fraud, commodities fraud, and conspiracy.
Arrest Details
Kwon, 31, was arrested in Montenegro along with another South Korean citizen who remains unnamed. The European countrys interior ministry confirmed the arrest, stating that Kwon was suspected of being a fugitive and was behind losses of over $40 billion. Kwon and the other man were apprehended at the Podgorica airport while trying to board a flight to Dubai, using forged documents from Costa Rica that were identified by Interpol.
Criminal and Civil Cases
South Korean authorities revealed last year that Kwon had traveled to an unknown country via Dubai after leaving Singapore. The criminal charges come after a related civil case against Kwon and his Singapore-based company Terraform Labs was announced by the US Securities and Exchange Commission (SEC) last month. Holders of TerraUSD and Luna lost approximately $40 billion after the so-called “stablecoin” fell below its $1 peg in May. TerraUSD was marketed as being pegged to the US dollar to prevent wild price swings, but authorities alleged that the values of the token and Luna were linked.
Investigations and Crackdowns
Multiple criminal investigations were opened by South Korean authorities into the crash that saw some investors lose their life savings. Kwons arrest is the latest example of a growing crackdown on cryptocurrencies following multiple scandals in the sector, including the collapse of FTX and the arrest of its founder Sam Bankman-Fried. The DOJ is among several agencies that have been cracking down on cryptocurrency fraud and other crimes, and it is likely that this trend will continue in the coming years.
Response
A lawyer for Kwon has not yet commented on the case. Holders of TerraUSD and Luna have not yet responded to the news of Kwons arrest and the charges against him. It remains to be seen how this latest development will affect the cryptocurrency market as a whole.
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