Terra Founder Do Kwon Arrested in Montenegro, Interior Minister Says

Do Kwon, the Co-Founder of the collapsed stablecoin issuer Terraform Labs, has been arrested by police authorities in Montenegro, Filip Adzic, the country’s Interior Minister disclosed on Thursday. According to Adzic, Kwon was arrested at the Podgorica Airport and was found with falsified documents.

“Montenegrin police have detained a person suspected of being one of the most wanted fugitives, South Korean citizen Do Kwon, the Co-Founder and CEO of Singapore-based Terraform Labs,” Adzic tweeted on Thursday in Croatian (translated by Google).

U PODGORICI UHAPŠEN JEDAN OD NAJTRAŽENIJIH SVJETSKIH BJEGUNACACrnogrska policija lišila je slobode lice za koje se sumnja da je jedan od najtraženijih bjegunaca, južnokorejski državljanin Do Kwon, suosnivač i izvršni direktor Terraform Labs sa sjedištem u Singapuru.1/2

Yonhap News Agency, a local Korean news wire, reported that an official from the national police agency “confirmed that he was the same person as CEO Kwon” by using photo data. Additionally, local police checked for the age, nationality and name of the arrested person using the identification card in his possession, the outlet said.

“We are waiting for official confirmation of identity,” Adzic, on his part, wrote in the tweet.

Terra-LUNA Collapse Wiped $40 Billion Away

Kwon ran the algorithmic stablecoin TerraUSD (UST) and the associated token LUNA starting in April 2018. He marketed UST as a yield-bearing stablecoin providing returns of up to 20%. However, UST, which was pegged 1-to-1 with the US dollar, lost its balance in May 2022, touching down near zero.

The failure of the project sent panic across the global cryptocurrency world, ultimately resulting in a wave of bankruptcies among digital asset firms exposed to the project. Experts estimate that losses from the failure topped $40 billion.

Following the collapse, a South Korean court issued an arrest warrant against Kwon for allegedly violating South Korean capital markets laws. Two months earlier, authorities in the country raided Kwon’s house in an attempt to establish the criminal activities behind the Terra-LUNA collapse.

During the early days following the collapse, Kwon said he was cooperating with authorities on their investigation. However, his whereabouts remained unknown for many months.

Last month, the US federal securities regulator charged the Terra Co-Founder for running a "multi-billion-dollar crypto asset securities fraud." Furthermore, the watchdog alleged that crypto assets offered by Kwon’s company were unregistered securities.