According to Montenegro’s Ministry of Interior, Terraform Labs co-founder Do Kwon was arrested yesterday at an airport in the country’s capital city of Podgorica. The agency’s head Filip Adzic stated that the Montenegrin police were holding a south Korean citizen in detention.
However, the country’s authorities are still verifying that the person arrested is actually Kwon because there are claims that the individual was in possession of forged documents. Meanwhile, South Korean news outlets are already reporting that Montenegrin police have confirmed the detained person is Terra Labs’ founder.
The Terra’s Collapse
The arrest comes ten months after the crash of the Terra ecosystem in May 2022. The event sent the entire crypto industry into the red, leading to the collapse of numerous companies like Three Arrows Capital, a crypto hedge fund.
Terra’s downfall was triggered by the implosion of the stablecoin UST and token LUNA. As a result, investors lost a combined $40 billion. The Bitcoin price was also affected, falling from $40,000 to $26,900 within two weeks.
Meanwhile, the price of LUNA has dropped by 8% in the past 24 hours following news about Do Kwon’s arrest. According to CoinGecko, the token is now trading at $1.30. Moreover, Terra’s UST, which rebranded to TerraClassicUSD, declined by 6% over the past day.
Kwon’s Arrest Warrant and Various Charges
An arrest warrant for Terra Labs founder was issued last September by South Korean authorities, and the International Criminal police organization approved it a few weeks later, making Do Kwon a wanted criminal globally.
In February, the Securities and Exchange Commission (SEC) accused Kwon of engineering a multi-billion dollar securities fraud through his firm’s stablecoin UST. The Commission filed the complaint in the US District Court for the Southern District of New York. The same court is currently handling the case of FTX ex-CEO Sam Bankman-Fried.
On top of accusations centered around UST, the SEC also alleges that Kwon committed fraud by providing investors with misleading information to develop trust before bringing them significant losses.
The Terra Labs founder has not been active on Twitter since last December after calling out Bankman-Fried for his role in Terra’s collapse.