Montenegrin Justice Minister Confers with SEC on Do Kwon Case

The Montenegrin government has revealed that Justice Minister Andrej Milović engaged in discussions with officials from the United States Securities and Exchange Commission (SEC) regarding the ongoing investigation into Terraform Labs’ co-founder, Do Kwon. This information emerged from a notice dated May 22, wherein it was specified that Milović had meetings with SEC representatives, including their Enforcement Director, Gurbir Grewal.

During these discussions, the Justice Minister focused on the SEC’s legal proceedings against Do Kwon and Terraform Labs. The SEC had previously won a case in April, declaring Kwon and his company liable for fraud. At the moment, Do Kwon is in Montenegro, where the courts are assessing extradition petitions from both the United States and South Korea. His detainment in Montenegro dates back to March 2023, following his arrest for using fake travel documents, which resulted in a four-month prison sentence.

Although Do Kwon is now free to move within Montenegro after serving his sentence, his legal team has filed numerous appeals, causing delays in the extradition process. These legal maneuvers have added layers of complexity to an already intricate case. Depending on how the courts rule, the final decision on Kwon’s extradition to either the U.S. or South Korea will rest with Justice Minister Milović.

In the United States, the legal troubles for Do Kwon continue to mount. A judge is set to deliberate on possible repercussions for both Kwon and Terraform Labs in a hearing scheduled for May 29. This follows a jury’s determination that they were responsible for fraud. The SEC has suggested a severe financial penalty, proposing that Kwon and Terraform Labs pay approximately $5.3 billion covering disgorgement, prejudgment interest, and civil fines.

The downward spiral for Terraform Labs began when its algorithmic stablecoin TerraUSD (UST) experienced significant instability in 2022. This instability was a key factor in the company’s collapse, leading to severe financial repercussions. The situation deteriorated further when, in January, Terraform Labs filed for bankruptcy protection in the United States, disclosing liabilities and assets estimated to be as high as $500 million.

Since then, the focus has shifted to extraditing Kwon, as authorities in both the U.S. and South Korea have intensified their efforts to bring him to trial in their respective countries. This situation underscores the intricate international dimensions of financial fraud cases, especially when they involve emerging technologies like cryptocurrency.

The developments surrounding Do Kwon and Terraform Labs also highlight the critical role of international cooperation in tackling financial crimes. Montenegro’s involvement and its collaboration with the SEC demonstrate how cross-border legal coordination is essential for handling complex fraud cases.

As the legal proceedings continue, the outcome of this case could set important precedents for the treatment of cryptocurrency-related fraud, influencing future regulatory and enforcement actions in the industry. The global interest surrounding the extradition and prosecution of Do Kwon further emphasizes the growing scrutiny over digital assets and their associated risks.