Kwonzi Scheme 2: Do Kwon Gets Indicted For Fraud As Interpol Confirms His Arrest

Do Kwon, the crypto tycoon behind the high-yielding stablecoin TerraUSD and its companion token Luna, which collapsed last year and wiped out roughly $40 billion from the cryptocurrency market, was charged with fraud by US prosecutors on Thursday after his detention in Montenegro.

According to a federal court filing, Kwon was charged with conspiracy to commit commodities fraud, securities fraud, wire fraud, conspiracy to deceive investors, and engaging in market manipulation.

Soon after, Kwon was reportedly apprehended in Montenegro on Thursday while attempting to fly to Dubai using fraudulent Costa Rican travel documents.

According to Interpol, a man seized in Montenegro is Kwon Do-hyeong, also known as Do Kwon, the disgraced founder of a defunct cryptocurrency startup who is wanted in South Korea and the United States on fraud and other offences.

Based on a source who told Coindesk, the Department of Justice will pursue Kwon’s extradition to the United States. Nevertheless, it is uncertain whether US officials will be able to secure his extradition because Kwon’s native country, South Korea, has also requested his extradition on allegations of breaking the country’s capital market rules.

Interpol’s national central bureau in Seoul confirmed Kwon’s identification through a fingerprint match on Friday.

A day earlier, Montenegrin Internal Affairs Minister Filip Adžić announced on social media that a man suspected to be Kwon had been apprehended in the capital Podgorica.

“He was arrested at the airport with counterfeit documentation and is wanted by several countries, including the USA, South Korea, and Singapore,” Adžić said in a Facebook post.

When operating the blockchain platform Terraform Labs, Kwon was stationed in Singapore. In December, Seoul prosecutors informed CNN that the crypto entrepreneur was thought to be in Serbia, where he had gone into hiding after fleeing Singapore through Dubai.

The Securities and Exchange Commission earlier this year had already charged Terraform Labs and Kwon with plotting a multi-billion dollar crypto asset securities scheme using an algorithmic stablecoin and other crypto asset securities.

Kwon was arrested in September by a South Korean court after he was accused of fraud by investors in the country following the failure of his company.

The Terraform founder was charged with fraud and violating South Korea’s capital markets law. In October, he stated that he did not believe the charges were real and that they were “politically motivated.”

The crypto engineer has often stated on Twitter that he is not “on the run,” but has refused to reveal his location owing to concerns about his personal safety.

TerraUSD, a stablecoin designed to maintain a $1 price point, was created by Terraform Labs. The collapse of TerraUSD and Luna, two linked coins, kicked off the so-called “crypto winter,” from which the industry was still battling to recover even as it suffered another major blow with the failure of crypto exchange FTX in November.

Information for this story was found via the Forbes, CNN, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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