Court upholds Terra founder Do Kwon’s prison sentence

The Montenegro High Court has denied the appeal of Terra founder Do Kwon regarding his prison sentence on charges of falsifying documents.

The Higher Court of Podgorica affirmed the guilty verdict issued by a lower court in June, stating that the four-month prison sentence is deemed adequate punishment for the crime committed.

Do Kwon, along with Terra executive Han Chang-Joon, was arrested in Montenegro in March for attempting to leave the country using fake Costa Rican passports. Kwon, who is the founder of Terraform Labs, testified that he believed the passports were legitimate​​​​.

Many enforcement authorities and financial regulators, as well as the Interpol, were already on the hunt for Kwon for his alleged involvement in the collapse of terraUSD (UST) stablecoin and the Terra ecosystem.

Montenegro is geographically located south of Serbia, which emerged over the last few months as a possible location for Do Kwon, who’s wanted in his native country on charges of manipulating the capital markets. Kwon, who has been on the run since May 2022, denies any wrongdoing as he alleges that capital-markets law doesn’t apply to crypto assets.

As many authorities requested assistance from the Serbian police, reports surfaced that Kwon moved to a neighboring country as there was no official entry or exit record. Other reports suggested that he had flown to Dubai after exiting Singapore, where his crypto projects had a base.

LUNA tanked to virtually zero in a couple of hours after having peaked close to $120 with a market cap of more than $18.5 billion. Additionally, its sister stablecoin TerraUSD, or UST, lost its dollar peg before the collapse.

Globally, investors in TerraUSD and Luna lost an estimated $42 billion. Worse still, the meltdown has shaken confidence in the broader cryptocurrency industry and led to the failure of several major crypto companies including crypto lender Celsius and crypto fund manager Three Arrows Capital.

The turmoil also set off a domino effect, triggering industry-wide bankruptcies that peaked with the collapse of the world’s second largest crypto exchange, which was part of the disgraced FTX Sam Bankman-Fried’s crypto empire.