Crypto Fugitive Do Kwon Is Arrested In Montenegro, Officials Say
The cryptocurrency entrepreneur Do Kwon — who designed a pair of digital currencies that failed spectacularly last year, triggering a market meltdown — was arrested in Montenegro on Thursday, the country’s authorities announced.
Local authorities arrested Mr. Kwon, 31, and another person for using forged Costa Rican travel documents at a passport check before a flight from Montenegro to Dubai, the Interior Ministry said on Twitter.
Mr. Kwon’s whereabouts had been a source of intense speculation in the crypto world since last fall, when the authorities in his native South Korea issued an arrest warrant for him and five others on financial charges. In September, Interpol, the international police organization, issued a “red notice” calling for his arrest, acting at the request of the South Koreans.
A spokesperson for Mr. Kwon did not respond to a request for comment. A representative for Montenegro’s Interior Ministry referred The New York Times to the Twitter statement announcing Mr. Kwon’s arrest.
A graduate of Stanford, Mr. Kwon rose to prominence as a founder of Terraform Labs, a company that offered two digital currencies, TerraUSD and Luna. TerraUSD was a “stablecoin,” designed to maintain a constant price of $1, while Luna was a more traditional type of cryptocurrency, with a value that often fluctuated.
But the digital coins were closely linked. TerraUSD was supposed to maintain its $1 peg through algorithms connecting it to Luna. As the crypto market boomed in 2021 and early 2022, the digital coin became wildly popular, with Luna’s total value shooting up to $40 billion.
When critics pointed out risks in the coins’ algorithmic design, Mr. Kwon often shut them down, with taunts like “I don’t debate the poor.”
Then his empire collapsed in a matter of days. In May, the price of Luna declined, setting off a so-called death spiral that brought TerraUSD down with it. The crash wiped away tens of billions of dollars in value overnight and caused a market meltdown that tanked the prices of Bitcoin, Ether and other popular cryptocurrencies. Investors in Luna and TerraUSD lost everything.
Mr. Kwon came under fire for his role in the implosion, transforming from a leading industry figure into one of its most notorious villains. In September, South Korean prosecutors charged him with violating the country’s financial laws, before Interpol issued the red notice.
In response to the arrest warrant, Mr. Kwon tweeted that he was willing to cooperate with the authorities. “I am not ‘on the run’ or anything similar,” he said. Prosecutors responded that Mr. Kwon was “obviously on the run,” according to Yonhap, the South Korean news agency.
Mr. Kwon has also come under scrutiny in the United States. In February, the Securities and Exchange Commission charged him with orchestrating “a multibillion-dollar crypto asset securities fraud.”