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Montenegro Justice Minister Confers with SEC on Terraform Labs Fraud Case

Terraform Labs co-founder, Do Kwon, awaits extradition to the U.S. amid legal delays following Terraform's financial collapse.

to discuss the fraud case against Terraform Labs co-founder Do Kwon, whose extradition is pending amid legal delays following Terraform's financial collapse.
Credit: Foretoken Media 2024

PODGORICA – Montenegro’s Justice Minister Andrej Milović recently met with officials from the United States Securities and Exchange Commission (SEC) to discuss the ongoing investigation into Terraform Labs co-founder Do Kwon. The meeting, held on May 22, included discussions with SEC Enforcement Director Gurbir Grewal, focusing on the case where Kwon and Terraform were found liable for fraud in April.


SEC's Fraud Case Against Do Kwon


The SEC's case against Do Kwon is a significant development in the ongoing saga of Terraform Labs. The investigation revealed that Kwon and his company were involved in fraudulent activities, leading to a jury finding them liable. As Montenegro's courts consider extradition requests from both the U.S. and South Korea, Kwon remains in the country after being sentenced to four months in prison for using falsified travel documents in March 2023.


Kwon’s legal team has filed several appeals, delaying the extradition process. Depending on the court rulings, Justice Minister Milović may ultimately decide whether Kwon will be extradited to the United States or South Korea. This decision is crucial as both countries seek to hold Kwon accountable for his actions related to Terraform Labs' collapse.


Terraform Labs' Financial Collapse


Terraform Labs faced a major financial collapse in 2022 due to the instability of its algorithmic stablecoin, TerraUSD (UST). The firm's downfall was marked by a bankruptcy filing in the U.S. in January, where it reported liabilities and assets estimated up to $500 million. The SEC has proposed that Kwon and Terraform pay approximately $5.3 billion in disgorgement, prejudgment interest, and civil penalties.


A hearing scheduled for May 29 in the United States will determine the remedies to be imposed on Terraform and Kwon following their fraud liability. The outcome of this hearing, alongside the extradition decisions, will shape the future legal landscape for Do Kwon and the enforcement of justice in the wake of Terraform's collapse.

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