US, South Korea argue over extradition of crypto fugitive Do Kwon

“A lot of it comes down to diplomacy on the Montenegrin side,” said Brendan Quigley, a former Manhattan federal prosecutor and partner at law firm Baker Botts.

Mr Kwon was arrested last week at the airport in Montenegro’s capital, Podgorica, and is currently in jail while local authorities investigate allegations that he had a fake passport, the official said on Wednesday. the country’s justice minister, Marko Kovac, during a press conference.

The extradition would take place after any criminal proceedings related to the local investigation, Kovac said. A Montenegrin court would decide where to extradite Mr. Kwon and make a decision based on the seriousness and location of the alleged crime, the order in which the extradition requests were received and other factors, said said Mr. Kovac.

Mr. Kwon created TerraUSD, a so-called algorithmic stablecoin that aimed to maintain a price of $1. Last year, the coin lost its peg to the dollar, setting off a chain reaction that wiped out $40 billion of value from digital currency markets and wiped out many investors.

South Korea issued an arrest warrant for Mr Kwon in September and asked the global police body Interpol For issue a red notice that effectively puts law enforcement around the world on the lookout for the crypto entrepreneur. He faces charges of violating the country’s capital markets law. The South Korean-born Stanford University graduate had been living in Singapore but disappeared six months ago, until his arrest last week.

Hours after Mr. Kwon was arrested in Montenegro, the Manhattan U.S. Attorney’s Office charged Mr. Kwon with eight counts of fraud, alleging he lied about the effectiveness of TerraUSD’s algorithm. and conspired to manipulate the price of the stablecoin.

Mr. Kwon’s lawyer representing him in the US case did not respond to a request for comment.

A spokeswoman for the Seoul Southern District Prosecutor’s Office, the body investigating the TerraUSD crash, said the office believes “a South Korean citizen should be punished in South Korea” and that would be the “most helpful” way to approach the problem. victims.

In South Korea, some investors said they would prefer Mr. Kwon be extradited to the United States because the criminal charges there would likely carry a heavier sentence than those in South Korea.

A spokesperson for the Manhattan US Attorney’s Office said in a statement that it would seek Mr Kwon’s extradition.

The country that would ultimately be granted Mr. Kwon’s extradition would prosecute one of the most prominent crypto entrepreneurs, but Montenegro is unlikely to hand him over soon. Extradition involves slow diplomatic exchanges between countries, as well as sometimes lengthy legal proceedings under the domestic laws of the receiving state.

“I expect this case to take at least several months. Some cases take years,” said Jacques Semmelman, a former Brooklyn federal prosecutor and partner at the law firm Katten Muchin Rosenman LLP.

Extraditions usually take place when two countries have an existing formal agreement. Mr Semmelman said the United States does not have a bilateral extradition treaty with Montenegro, which would put it at a disadvantage. South Korea and Montenegro are parties to a multilateral treaty known as the European Convention on Extradition, he said. “I think South Korea has a more compelling claim,” Semmelman said.

South Korea and the United States have an extradition treaty. If Mr. Kwon were to be extradited to South Korea, the United States could also later make an extradition request to Seoul, Mr. Semmelman said.

Extraditions can take place even without a treaty. The United States could make a request to Montenegro based on international comity, an acknowledgment by one country that proceedings in another country are considered fair.

Montenegro has already extradited fugitives at the request of the United States, including a California couple last year who were convicted of fraud but fled to avoid serving long prison sentences. They were extradited in November after their arrest months earlier, according to the Justice Department.

Mr Quigley, Baker Botts’ partner, said that when he was a federal prosecutor he was involved in several cases where defendants were brought to the United States without going through a formal extradition process. Sometimes the absence of a treaty helped reduce red tape, as did diplomacy and a good working relationship with law enforcement in a foreign country, he said.

“Just because you don’t have an extradition treaty doesn’t mean you can’t bring in a defendant from another country,” he said.

Write to James Fanelli at [email protected] and Jiyoung Sohn at [email protected]