SEC’s “House of Cards” Allegations Lead to Do Kwon’s Release from Montenegrin Prison

After the Supreme Prosecutor raised concerns about the extradition treaty, Do Kwon, the co-founder of Terraform Labs, has finally been released from jail in Montenegro. However, his release comes with several legal restrictions, including house arrest, a travel ban, and passport restrictions, as he awaits extradition to either the U.S. or South Korea.

Both countries are seeking Kwon’s extradition to face criminal charges related to fraud in connection with the collapse of the $40 billion Terra ecosystem in May 2022. The collapse of Terra has prompted the U.S. Securities and Exchange Commission (SEC) to initiate a civil fraud trial against Kwon and Terraform Labs in New York.

The SEC accuses them of deceiving investors about the stability of Terra and its integration into a popular Korean mobile payment app. According to SEC attorney Devon Staren, Terra was a “house of cards,” and when it collapsed, investors suffered significant losses. The trial of Kwon and Terraform Labs is still pending, as Kwon remains outside the U.S. and his extradition has not been finalized. At the same time, Terraform Labs is in the process of filing for bankruptcy.

Do Kwon’s release on bail is a significant development in the ongoing legal battle faced by Terraform Labs. As the SEC’s civil fraud trial continues and extradition proceedings hang in the balance, the outcome of the case remains uncertain. The allegations of fraud and the characterization of Terra as a “house of cards” highlight the gravity of the situation.