Former Terraform Labs CEO won’t be extradited to US, South Korea yet: Bloomberg

Last week, WSJ reported that Montenegro planned to extradite Kwon to the US rather than South Korea

December 12, 2023 01:22 pm

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Montenegro is slowing its roll on extraditing former Terraform Labs CEO Do Kwon, according to Bloomberg.

Last week, the Wall Street Journal reported that Montenegro planned to extradite the former executive to the United States over his home country, South Korea. Kwon faces charges in both countries.

The extension, Bloomberg reported, came at the request of both the US and South Korea. A court in Podgorica ruled that the term in custody would be extended to February. Without an extension, the term would have ended Friday.

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Kwon has been in Montenegro since March, when he was first arrested for allegedly using falsified paperwork. He was sentenced to prison in June.

The court spokesperson, Marija Rokovic, told Bloomberg that Kwon’s defense team appealed the extradition decision, which will now be heard by an appellate court in Podgorica. The High Court previously ruled that extradition could take place, and left it to the justice minister of Montenegro to decide where to extradite Kwon.

The US Securities and Exchange Commission has an open case against both Kwon and his former company, Terraform Labs. The suit was filed in February after the collapse of algorithmic stablecoin TerraUSD (UST), which led to a $40 billion crypto crash. UST’s failure also helped lead to multiple bankruptcies from the likes of Voyager and Celsius, both of which had exposure to the stablecoin.

The SEC alleges that Terraform and Kwon offered and sold unregistered securities. Kwon, in South Korea, faces fraud and capital markets violations charges.

Terraform and the SEC are currently debating whether Judge Jed Rakoff or a jury should determine if the alleged securities Terraform and Kwon offered fall under the US law’s definition of securities.

The SEC is in favor of Judge Rakoff issuing a summary judgment on the status of the alleged securities instead of letting a jury decide. The defense, however, would rather let the jury decide if the tokens pass the Howey test.

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