Dohyung Kwon (33), CEO of Terraform Labs, the main culprit in the collapse of virtual assets Terra and Luna, was extradited to the United States to stand trial. Korea, which has been engaged in a ‘race to repatriation’ with the United States, cannot promise repatriation, so it appears that relief for the 200,000 domestic investors will be difficult. The investment damage caused by Mr. Kwon is estimated to be more than 50 trillion won worldwide, and there are predictions that he could face more than 100 years in prison in the United States.
Poveda, a local daily newspaper, reported that Montenegro’s Podgorica High Court decided on the 21st (local time) to extradite Mr. Kwon to the United States. The media added that South Korea’s request for extradition of Mr. Kwon was rejected. The repatriation country was decided 22 months after Mr. Kwon fled.
Mr. Kwon was once called the ‘Korean version of Elon Musk’ and received attention for his new way of maintaining the value of Terra and Luna, but as the system collapsed and his value plummeted, he was instantly reduced to a criminal. He left for Singapore in April 2022, just before the incident broke out, and then fled to Montenegro on the Balkan Peninsula in Eastern Europe via Dubai and Serbia in the United Arab Emirates (UAE). He was arrested at the airport on March 23 last year while trying to leave the country with a false passport. Terraform Labs Chief Financial Officer (CFO) Chang-Jun Han, who was also arrested at the time, was repatriated to Korea and arrested on the 21st of this month.
At the time of his arrest, South Korea and the United States were competing to request extradition for Mr. Kwon. The Montenegrin court announced that the Korean Ministry of Justice sent an extradition request on March 29 and the U.S. State Department on April 3. Kwon’s side wanted him to be extradited to Korea, where his sentence would be less, but the court ultimately decided to send him to the United States.
The court did not disclose the basis for its decision, but Montenegro’s Justice Minister Andrej Milovic explained to local media last November that a political decision was necessary, saying, “The United States is our most important foreign policy partner.” If Mr. Kwon appeals, his extradition may be delayed further, but there is a high possibility that the court will not accept it, so there are speculations that he will be extradited to the United States by March 22nd. He may appear at the trial of the U.S. Securities and Exchange Commission (SEC) lawsuit, which begins on March 25 in the U.S. District Court for the Southern District of New York.
Mr. Kwon is expected to receive a heavy sentence in the United States. In Korea, the maximum sentence for economic crimes is about 40 years, but in the United States, sentences for individual crimes can be added up to more than 100 years in prison. The U.S. SEC filed a civil suit against Mr. Kwon and Terraform Labs in February 2022, alleging securities fraud. Federal prosecutors in New York also indicted him on eight charges, including commodity and securities fraud and market manipulation, a month later.
In a similar case, Sam Bankman-Fried, founder of virtual asset exchange FTX, was found guilty on seven charges, including embezzling billions of dollars of customer money, and is expected to receive more than 100 years in prison at his sentencing hearing in March.
On the 22nd, posts were posted in online communities and chat rooms where victims of the Luna/Terra incident gathered, asking, “How will I be compensated for the money I lost?” At the same time, there were many reactions of relief. In Korea, unlike the United States, virtual assets are not recognized as securities, so it is difficult to apply securities fraud, and even if applied, the sentences are small, so there is a possibility of ‘light punishment’.
Experts predicted that relief for Korean victims would be relegated to a lower priority. Changmin Cheon, a professor of global techno management at Seoul National University of Science and Technology, said, “It is highly likely that there will be no assets left to give to Korean victims as compensation is paid to American investors first.”
It is reported that the Korean Ministry of Justice has not received official notification from the Montenegrin government. The position is that suspension of the statute of limitations will be considered after official notification of whether Mr. Kwon will be repatriated to the United States. The Seoul Southern District Prosecutors’ Office has been conducting related investigations since investors sued and accused Mr. Kwon and others on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes in May 2022.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.