Do Kwon Arrested: Faces $4.5B Fine, Extradition to US
Disgraced crypto entrepreneur Do Kwon has been arrested in Montenegro and sentenced to four months in prison for ID forgery. The SEC has accused him and his company, Terraform Labs, of a massive securities fraud in the United States. His extradition to South Korea and the US has been approved by Montenegro's highest court.
Do Kwon's troubles began with the collapse of Terra's stablecoin and cryptocurrency in 2022, wiping out around $40 billion in value and contributing to the downfall of the FTX exchange. The SEC has since accused him and Terraform Labs of 'one of the largest securities frauds in US history'.
A US court has ordered a record-breaking fine of $4.5 billion against them, consisting of $3.5 billion in restitution, over $460 million in interest, and $420 million in civil penalties. Do Kwon personally is to pay around $200 million, with the rest to be paid by Terraform Labs. However, the company now has only $150 million in assets left, according to a bankruptcy filing.
As part of the penalty, Do Kwon and Terraform Labs are banned from buying or selling cryptocurrencies or tokens, including those belonging to the Terra ecosystem. Do Kwon is currently free on bail but awaiting a final ruling on his extradition, with restricted movement.
The SEC's case against Do Kwon and Terraform Labs is one of the largest securities fraud cases in US history. With his extradition approved, Do Kwon faces a potential lengthy legal battle and significant financial penalties. The collapse of Terra's stablecoin and cryptocurrency has left a lasting impact on the crypto market, with the fine serving as a stark warning to others in the industry.
