Katherine Ross

Former Terraform Labs CEO Do Kwon may be on his way to the US, according to a report from the Wall Street Journal.



The Journal <a href="https://www.wsj.com/livecoverage/stock-market-today-dow-jones-12-07-2023/card/exclusive-montenegro-plans-to-extradite-fallen-crypto-tycoon-do-kwon-to-u-s--go9pVSEoANWEjPKGAfD6?page=1">reports</a> that Montenegro plans to extradite Kwon to the US rather than South Korea. Kwon faces charges in both countries.



Kwon has been held in prison in Montenegro since March after authorities alleged that he falsified travel documents. He was sentenced to four months in prison back in June.&nbsp;



The US Securities and Exchange Commission has an open case against both Kwon and Terraform Labs, alleging the offer and sale of unregistered securities. South Korea charged Kwon with fraud and violations of the country’s capital markets laws.&nbsp;



Both the company and Kwon faced scrutiny from regulators after the collapse of the algorithmic stablecoin TerraUSD (UST). The stablecoin’s failure triggered a $40 billion crash in the crypto market and spurred the bankruptcies of multiple lenders with exposure to UST, including Celsius and Voyager.&nbsp;



Kwon’s extradition was approved by a court last month. Justice Minister Andrej Milovic was given the decision on where to send Kwon. According to <a href="https://rtcg.me/vijesti/drustvo/495069/stigla-zalba-na-odluku-o-izrucenju-do-kvona.html">local media reports</a> in Montenegro, Kwon attempted to appeal the extradition.



The Journal report cites unnamed sources and quotes Milovic as saying that the “public will be informed of the decision in a timely manner.”



In the US, the SEC and Terraform have gone back and forth in regards to a deposition from Kwon — <a href="https://blockworks.co/news/do-kwon-us-deposition-impossible">which Kwon’s lawyers argued was “impossible”</a> — and a summary judgment from Judge Jed Rakoff.&nbsp;



The SEC wants Rakoff to rule on whether or not the tokens offered were indeed securities, as the regulator alleges, so that the <a href="https://blockworks.co/news/sec-judge-oversee-terrform-ruling">decision is not up to a jury</a>.



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Terraform Labs founder Do Kwon faces US extradition: WSJ

Casey Wagner

Blockchain provider Ripple has sealed a deal with the Central Bank of Montenegro to launch a pilot program for the country’s CBDC, the company announced Tuesday.&nbsp;



The <a href="https://blockworks.co/tag/cbdc" target="_blank" rel="noreferrer noopener">CBDC</a>, or central bank digital currency, which the central bank is calling a “national stablecoin,” is intended to promote financial stability and access to the banking system in Montenegro, the central bank said in a <a href="https://www.cbcg.me/en/about-us/history-goals-and-functions/objectives-and-functions/objectives">statement</a>. 



Central bankers opted to partner with <a href="https://blockworks.co/tag/ripple" target="_blank" rel="noreferrer noopener">Ripple</a> because of the blockchain’s “proven track record of successfully connecting disparate payment systems and championing blockchain’s utility,” said James Wallis, Ripple’s vice president of central bank engagements and CBDCs. 



Ripple currently offers services for “minting, managing, transacting, and destroying CBDCs,” the company said. By destroying the currency after its successful creation, Ripple hands off full control of the CBDC to the bank, it said.&nbsp;



Montenegro, where <a href="https://blockworks.co/news/do-kwon-arrested">Terraform Labs founder Do Kwon was arrested last month</a>, has historically been favorable to the crypto industry. In 2022, the country made Ethereum founder Vitalik Buterin a <a href="https://news.bitcoin.com/vitalik-buterin-becomes-citizen-of-crypto-friendly-montenegro/">citizen</a> in an effort to boost its status as a hub for blockchain innovation. 



The Balkan nation has a relaxed approach to crypto regulation and has supported businesses accepting digital currencies as a means of payment since 2020, researchers from Mundo said in a <a href="https://mundo.expert/en/BlogNews/Montenegrothemostunderratedcryptojurisdiction">blog</a> post.&nbsp;



Montenegro is just one of several countries looking to ramp up its digital banking system with a CBDC. <a href="https://blockworks.co/news/cbdc-results-may-vary">Brazil has said its pilot CBDC</a> will be rolled out before the end of the year. The Bank of Japan is working on its proof of concept and trial run, which will include participation from three of the country’s largest banks, <a href="https://www.boj.or.jp/en/paym/digital/dig230217b.pdf">officials</a> said. 



In the US, opinions are mixed about the potential pros and cons of a CBDC. Proponents argue it is a necessity to remain a dominant economy, while others argue that the lack of privacy poses a problem. 



The <a href="https://blockworks.co/tag/federal-reserve" target="_blank" rel="noreferrer noopener">Federal Reserve</a> has been investigating the potential role of a CBDC and what it might look like in practice through its FedNow instant payments program, <a href="https://blockworks.co/news/fed-payments-fednow-launch-july">set to launch this summer</a>. 



Montenegro’s central bank will be working with Ripple’s team on establishing a framework for its CBDC and later launching a pilot program, officials said. A timeline for when the currency will begin testing was not provided.



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