Terraform Labs' Do Kwon Denied Appeal in Passport Fraud Case

The High Court of Montenegro has denied Terraform Labs Founder's appeal, Do Kwon, upholding his four-month prison sentence for falsifying documents. This decision intensifies Kwon's plight as he faces potential extradition following the completion of his sentence.

Earlier, a decision by the court dealt a blow to Kwon's attempt to overturn the prison sentence. The jail term was issued by a lower court in June. Alongside a fellow Terraform Labs' executive, Han Chang-Joon, Kwon was charged with falsifying documents.

This case emerged nearly a year after the collapse of Terraform Labs. Both individuals have remained in custody since their arrest in March. Once his term in the Balkan nation concludes, Kwon faces the possibility of being handed over to authorities in the US or South Korea, Coindesk reported.

The Basic Court of Montenegro's capital, Podgorica, deemed the four-month prison sentence an "adequate" punishment for the crime. Additionally, the court highlighted the necessity of the imposed security measure, confiscating passports and identity cards, to prevent potential criminal acts by the perpetrators in future.

Do Kwon Faces Escalating Legal Tussle

Montenegro's Basic Court issued the four-month jail sentence against Kwon and Terraform Lab's Former Chief Finance Officer, Han Chong-Joon, marking a significant chapter in their legal battle.

The duo was apprehended in March in Montenegro while attempting to travel to Dubai via a private jet. The court confiscated fake Costa Rican and Belgian passports along with falsified identity cards from both executives.

Initially granted bail of €400,000 each, this reprieve was later annulled when an upper court deemed the executives' property evaluation incomplete following an appeal by the prosecutor. Reportedly, the time spent in detention by the Terraform Labs' executives will be factored into their sentences.

Criminal Charges and the Fallout from Terra's Collapse

In March, federal prosecutors in New York brought criminal charges against Kwon, highlighting eight counts related to his ill-fated stablecoin project. These charges encompassed commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and manipulate markets.

The arrest of Kwon marked a pivotal moment in the aftermath of Terra's catastrophic collapse, which erased a staggering $40 billion from the crypto ecosystem. Terraform Labs, under Kwon's leadership, issued an algorithmic stablecoin pegged to the US dollar before collapsing in May last year.