November 17, 2023

Founder of Terraform Labs, Do Kwon, Unsuccessful in Montenegro Passport Fraud Appeal

On November 16, a Montenegro court ruled against Do Kwon, the founder and former CEO of Terraform Labs, in his appeal after being convicted of passport fraud. Alongside Terra associate Han Chang-joon, Kwon had previously been sentenced to four months in prison.

Montenegro's court affirmed the conviction of Do Kwon, the founder of Terraform Labs, on charges of passport fraud, rejecting his appeal on November 16.

In June, Kwon and his Terra associate, Han Chang-joon, were found guilty of falsifying passport documents by the Basic Court in Podgorica, the capital of Montenegro. Both individuals were initially sentenced to four months in prison.

Following the conviction, the defendants lodged an appeal. However, the High Court in Podgorica, in its recent statement, upheld the original verdict and sentencing, stating that the basic court had accurately and comprehensively assessed the factual situation. The High Court emphasized that the basic court correctly applied Montenegro's criminal code, considering all circumstances in determining sanctions and their extent.

The court took into account the behavior of the two individuals and acknowledged that it did not establish whether the falsified travel documents were used. It justified the confiscation of Kwon and Chang-joon’s identity cards as necessary for their arrest, preventing potential future criminal acts.

Do Kwon is facing criminal charges in South Korea and the U.S. related to the failed Terra stablecoin project. Additionally, the U.S. Securities and Exchange Commission (SEC) has charged Kwon and Terra with securities violations.

The overseas passport fraud sentence has seemingly hindered the extradition of Kwon to the U.S. for the securities case, according to Terraform Labs' statements on September 27. The impact of the current sentence on his two criminal cases remains unclear.

Despite legal actions against Kwon, Terraform Labs continues to operate under new leadership, and as of November 2023, it has not closed or filed for bankruptcy. Notably, Kwon's projects, including the TerraUSD (UST) stablecoin, suffered substantial losses in May 2022 when the Luna crypto network collapsed, resulting in an estimated $60 billion loss in the digital currency space.

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