PODGORICA – Fugitive South Korean cryptocurrency entrepreneur Do Kwon, accused of orchestrating a multi-billion-dollar fraud that shook global crypto markets last year, has been arrested in Montenegro along with another South Korean national, the Interior Ministry said yesterday.
“Kwon Do-hyung and Han Chang-joon were arrested and brought to the state prosecutor’s office in Podgorica for the criminal act of document forgery”, an Interior Ministry statement said.
During passport control for a flight to Dubai, the two “used falsified travel documents from Costa Rica, which was established also by Interpol checks”, it said.
Inspection of their luggage also found travel documents from Belgium and South Korea, while Interpol checks discovered that the Belgian documents were forged, the ministry added.
Police seized from them three laptop devices and five mobile phones.
Their entry into Montenegro has not been registered, the ministry said.
South Korea has issued a warrant for them for the offence of “criminal association”, it added.
Earlier yesterday, Montenegrin Interior Minister Filip Adzic tweeted that police have detained at the Podgorica airport a “person suspected of being one of the most wanted fugitives, South Korean citizen Do Kwon, co-founder and CEO of Singapore-based Terraform Labs”.
South Korea asked Interpol in September to circulate a “red notice” for the 31-year-old across the agency’s 195 member nations.
Kwon and five others connected to Terraform are wanted for fraud and the implosion of its digital currencies in May 2022.
TerraUSD was designed as a “stablecoin”, which is pegged to stable assets like the greenback to prevent drastic fluctuations in prices.
However, around US$40 billion (RM176.7 billion) in market value was erased for the holders of TerraUSD and its floating sister currency, Luna, after the stablecoin plunged far below its US$1 peg in May last year.
Kwon is accused of “orchestrating a multi-billion-dollar crypto asset securities fraud”, according to the United States Securities and Exchange Commission.
Death spiral
Stablecoins are designed to have a relatively fixed price and are usually pegged to a real-world commodity or currency.
Many investors lost their life savings when Luna and Terra entered a death spiral, and South Korean authorities had opened multiple criminal probes into the crash.
Cryptocurrencies have come under increasing scrutiny from regulators across the globe following a string of recent controversies, including the high-profile collapse of the crypto exchange FTX.
FTX and its sister trading house Alameda Research went bankrupt late last year, dissolving a virtual trading business that had been valued by the market at US$32 billion.
The fall of FTX has caused major doubts about the long-term viability of cryptocurrency and heaped stress on further platforms and entities that rode the success of Bitcoin and other currencies.
To add to its mounting woes, the digital currency sector has also been hit hard by the demise of US crypto lenders Silvergate and Signature amid a string of banking failures that have rattled global markets and sparked fears of future economic turmoil. – AFP, March 24, 2023
