Il Nuovo Postiglione - Montenegro charges crypto fugitive Do Kwon with forgery

He is accused of fraud over his company's dramatic collapse last year, which wiped out about $40 billion of investors' money and shook global crypto markets.

Kwon, whose full name is Kwon Do-hyung, was arrested a day earlier in the airport of the Montenegrin capital Podgorica with a companion after being found travelling with fake documents.

"A criminal complaint was filed against both persons for the criminal offence of document forgery," Montenegro's police said Friday.

Kwon's TerraUSD was marketed as a "stablecoin", which is typically pegged to stable assets such as the US dollar to prevent drastic fluctuations in prices.

But TerraUSD was an "algorithmic stablecoin" -- not backed by assets, instead pegged only to its floating sister currency Luna. The two currencies went into freefall in May last year.

A court official said Kwon would appear in the Higher Court in Podgorica on Friday where the extradition request will be heard.

The official did not specify which country the extradition request had come.

But the interior ministry on Thursday said Kwon had been arrested on a South Korean warrant.

Seoul vowed to seek formal extradition.

"South Korean prosecutors will take steps to repatriate Kwon Do-hyung. We are working on the process," Kim Hee-kyung, a spokeswoman for the Seoul Southern District Prosecutors' Office, told AFP.

Following his arrest, the United States also charged him with eight counts, including securities fraud and wire fraud, which followed a lawsuit by the US Securities and Exchange Commission.

Kwon reportedly flew from South Korea to Singapore ahead of the company's crash in May last year.

In September, South Korean prosecutors requested Interpol to place him on the red notice list across the agency's 195 member nations, and revoked his passport.

- Fake passport -

But questions about his whereabouts intensified after the Singapore Police Force said that he was not in the country.

Montenegro authorities said Thursday that Kwon and a companion had "used falsified travel documents from Costa Rica" during passport control for a flight to Dubai.

Inspection of their luggage also revealed travel documents from Belgium and South Korea, while Interpol checks showed that Belgian documents were forged, Montenegro's interior ministry added.

South Korea's National Police Agency said it would collaborate with Montenegro as they seek Kwon's extradition.

South Korea is a member of the European Convention on Extradition -- a multilateral convention that facilitates extradition between member nations -- and Montenegro is also a signatory.

- 'Multi-billion-dollar fraud' -

Cryptocurrencies have come under increasing scrutiny from global regulators after a string of recent controversies, including the high-profile collapse of the exchange FTX.

Kwon is accused of "orchestrating a multi-billion-dollar crypto asset securities fraud", according to the US Securities and Exchange Commission.

"It is true that Kwon has done too much damage to too many people, with something that carried a lot of unexplained risks," Cho Dong-keun, an economics professor emeritus at Myongji University, told AFP.

"It's very unfortunate that he ran away. A responsible adult and entrepreneur would have stayed and explained. The fact that he tried to avoid authorities by even using forged passports shows his character."

Kwon and Terraform Labs also moved more than 10,000 bitcoin out of their failed project and converted some of the tokens into cash via a Swiss bank, Bloomberg News reported, citing the US SEC.

"Kwon certainly needs to be held accountable for his actions," Kim Dae-jong, a professor of business administration at Sejong University, told AFP.

"The bottom line is that Kwon didn't run the company according to laws and principles. He exploited it for his own personal, financial gain."

F.Criscuolo--INP