The first of a number of possible prison sentences has begun for Kwon Do-hyeong, also known as Do Kwon, the disgraced founder of collapsed crypto company Terraform Labs.

Reuters, citing local newspaper Vijesti, reported that a court in Montenegro has sentenced cryptocurrency entrepreneur Do Kwon to four months in prison for using forged passports.

In March the South Korean national had been arrested in Podgorica, the capital city of the Balkan country of Montenegro. Soon after that, both South Korea and the US sought his extradition to their respective jurisdictions.

Jail sentence

Kwon and a second person identified as Han Chang-joon, Terraform Labs’ former finance officer, had been arrested in March when they tried to board a flight to Dubai.

Montenegrin police had charged the two suspects with forging official documents after police alleged they had found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers and other devices in their luggage.

Last month a higher court in Montenegro rescinded a 800,000 euro bail for Do Kwon due to flight risk concerns.

The prosecution maintained that the defendants, once released from detention, would have no interest to stay in Montenegro where they would await their extradition.

Now Do Kwon and Han Chang-joon have been found guilty of forging official documents, and both have been sentence to four months in prison.

Kwon and Han had pleaded not guilty at their first court hearing in May, but last week Do Kwon dropped his request to check authenticity of the Costa Rican passports, after Interpol confirmed they were fake.

The prison sentences will include the time that Kwon and Han have already spent in detention after being arrested in March.

Extradition attempts

This prison sentence in Montenegro is likely not to be the last challenge for Do Kwon, as he is wanted in a number of other jurisdictions.

South Korea was the first to seek his extradition, when in last September it issued an international arrest warrant for Do Kwon, as well as five other unnamed people he worked with at Terraform Labs.

Then in February 2023 the US Securities and Exchange Commission (SEC) had “charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.

The US District Court in Manhattan then also made public an eight-count indictment against Do Kwon for securities fraud, wire fraud, commodities fraud and conspiracy.

On the run?

In 2022 Do Kwon had moved from South Korea to Singapore with his family following the collapse of his $40 billion digital asset project – which included the stablecoin Terra and its sister token Luna.

It is thought that nearly 250,000 people had invested in Terraform Labs’ coins, and blockchain analytics firm Elliptic estimated that investors in TerraUSD and Luna lost an estimated $42 billion.

The reclusive Kwon insisted neither he nor his company made money on the crash, but he did not exactly help his cause.

He is known for his caustic remarks about detractors, and told a YouTube crypto channel a week before the demise of TerraUSD, “95 percent [of coins] are going to die – but there’s also entertainment in watching companies die too.”

Just before the implosion he told followers on Twitter, “I love chaos.”

But on 13 May 2022 he tweeted, “I am heartbroken about the pain my invention has brought on all of you.”

After South Korea issued an international arrest warrant, and Interpol also issued a “red notice” for his arrest, Do Kwon was nowhere to be found.

Do Kwon previously denied that he was in hiding or on the run, but he did not reveal his whereabouts after police in Singapore could not locate him.

In December South Korean police said they believed Do Kwon was hiding in Serbia, after he had travelled via Dubai to an unknown country after leaving Singapore.

South Korean police had travelled to Serbia to track him down, before he was eventually arrested in Montenegro in March.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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