Crypto fugitive Do Kwon, head of the failed Luna, detained at Montenegro airport | Economy

End of the escape for the South Korean Do Kwon, the man behind one of the biggest scandals in the short history of cryptocurrencies. The Minister of the Interior of Montenegro announced this Thursday afternoon that a person suspected of being the creator of the Luna and TerraUSD digital currencies has been arrested. Filip Adzic’s message, posted on Twitter, explains that Do Kwon was arrested at Podgorica airport, when it was discovered that he was carrying false documents, and is now waiting for his identity to be officially confirmed.

South Korea, Singapore and the US were on his trail. The SEC, the US financial markets regulator, accuses him of orchestrating a multi-million dollar investor fraud. “They repeated false and misleading statements to build trust before causing devastating losses,” he said in a statement published last month. The company founded by Do Kwon, Terraform Labs, was based in Singapore, but when Luna and TerraUSD collapsed leaving a huge puff that caused a huge crisis for the crypto ecosystem and left hundreds of thousands of small savers without their savings, Kwon too it vanished

In September, a South Korean court issued an arrest warrant saying Kwon was residing in Singapore, but South Korean police failed to find him and said he no longer resided in the city-state. Since December he has been located in Serbia, very close to where he has been arrested, and even Bloomberg reported that South Korean agents traveled to that country to speak with the security forces about his possible whereabouts.

Do Kwon had become a ghost to be haunted, but he did not shut up for much of his time as a fugitive. He wrote regularly on Twitter, where he had a million followers who went from idolizing him as a tech genius to reviling him as one more heir to Bernard Madoff, the great Wall Street con man. The SEC demystified the idea that his firm ever deserved to be called innovative or revolutionary. “The Terraform ecosystem was neither decentralized nor funded. It was simply a fraud backed by an alleged algorithmic “stablecoin”, the price of which was controlled by the defendants, not by any code.”

20% returns

Kwon even responded to those who asked him where they were. “I’ll tell you what I’m doing and where I am if: 1) we’re friends 2) we have plans to meet 3) we’re involved in a GPS-based web3 game. Otherwise, you don’t have to know my GPS coordinates, ”he snapped last September. When another scandal broke, that of the crypto platform FTX founded by Sam Bankman Fried, he blamed him for having contributed to the fall of TerraUSD through his Alameda investment fund. And he allowed himself to send a cryptic threatening message: “What is done in the dark will come to light.” Shortly after, in December, perhaps worried about the siege that hung over him, he stopped writing.

Meanwhile, the victims who entrusted him with their money and never heard from him again called for justice. The scheme that led them to the precipice of losing it all was about attractive paper: from April 2018 until its collapse in May 2022, Do Kwon amassed billions of customers attracted both by Luna’s revaluations and by a compensation system that It gave returns close to 20% to those who deposited it in TerraUSD, an algorithmic currency linked to the dollar that lost parity with the greenback and ended up worthless. “Investors were misled about its stability,” the SEC charges.

In September, the South Korean Prosecutor’s Office requested Interpol’s cooperation in catching Do Kwon, and the agency issued an international warrant against him. Kwon responded by transferring an image of normality into his daily life. “As I already said, I am making zero effort to hide. I’m going for a walk and shopping malls, ”he said on Twitter, his only way of contacting the general public. Montenegro must now study the extradition orders against him, and as happened to FTX’s Bankman-Fried, who faces 115 years in prison, the judicial journey that begins now does not look good for Do Kwon.

Follow all the information of Economy and Business in Facebook and Twitteror in our weekly newsletter