As part of the ongoing investigation into the spectacular collapse of Terraform Labs and its algorithmic stablecoin TerraUSD, the company’s former Chief Financial Officer (CFO) Chang-Jun Han has been extradited to South Korea. This follows his arrest along with co-founder Dokwon in March 2023 in Montenegro while trying to flee on a private jet using forged documents.
Extradition approved: South Korea, indictment
The Montenegrin Ministry of Justice approved the extradition, allowing Korean authorities to “bring criminal proceedings for various crimes related to financial investment services, investment, and capital market fraud.” These charges carry a potential life sentence in South Korea.
But Kwon remains in Montenegro as he appeals the court’s decision to find him guilty of passport forgery. South Korea and the United States have requested his extradition in connection with the $60 billion TerraUSD collapse in May 2022. The depegging of algorithmic stablecoins to the US dollar has triggered a domino effect, affecting major companies such as cryptocurrency fund Three Arrows Capital and exchange FTX.
Goran Rodic, a lawyer representing both executives, said:
He added, “After the appeal, we are awaiting the ruling on the provincial government.”
Han’s extradition came after he completed a separate four-month prison sentence in Montenegro for passport forgery. Terraform Labs, which filed for Chapter 11 bankruptcy in the U.S. in January, did not respond to a request for comment.
LUNAUSD currently trading at $0.6486 on the daily chart: TradingView.com
From Success to Scandal: The Fall of Terraform
This story began in 2018, when CEO Kwon founded Terraform Labs with Daniel Shin. Over the next four years, the company and TerraUSD gained significant traction. However, in May 2022, the stablecoin experienced a dramatic decoupling from the dollar, leading to its collapse.
In September 2022, Korean authorities issued arrest warrants for Mr. Kwon and five others on charges of violating the Capital Markets Act. Interpol immediately issued a red notice to Mr. Kwon.
DL News reporters tracked Kwon’s movements in January 2023 after reports emerged that he was in Serbia. After a subsequent investigation, Kwon and Han were arrested in Montenegro on charges of using counterfeit Costa Rican passports.
With Mr. Han currently facing criminal proceedings in South Korea, legal experts predict that there will be more pressure to force Mr. Kwon to surrender or negotiate. His testimony and potential collaboration could provide important insight into the financial decisions and activities that contributed to the demise of the Terra ecosystem.
However, the legal path forward remains uncertain. Kwon’s extradition appeal could significantly delay a resolution for both him and his investors. Additionally, the results of these proceedings could set a precedent for regulatory frameworks and accountability measures within the cryptocurrency industry.
Changjun Han’s extradition marks an important milestone in the ongoing investigation into the collapse of Terraform Labs. While hopes are rising for accountability and a clearer understanding of the events that led to the $60 billion collapse, the fate of the dominions and the ultimate legal ramifications are yet to be revealed.
Featured image from AP-Council, chart from TradingView