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 final yr, triggering a market meltdown — was arrested in Montenegro on Thursday, the nation’s authorities introduced.

Native authorities arrested Mr. Kwon, 31, and one other individual for utilizing cast Costa Rican journey paperwork at a passport examine earlier than a flight from Montenegro to Dubai, the Inside Ministry said on Twitter.

Mr. Kwon’s whereabouts had been a supply of intense hypothesis within the crypto world since final fall, when the authorities in his native South Korea issued an arrest warrant for him and 5 others on monetary fees. In September, Interpol, the worldwide police group, issued a “pink discover” calling for his arrest, performing on the request of the South Koreans.

A spokesman for Mr. Kwon didn’t reply to a request for remark. A consultant for Montenegro’s Inside Ministry referred The New York Instances to the Twitter assertion asserting Mr. Kwon’s arrest.

A graduate of Stanford, Mr. Kwon rose to prominence as a founding father of Terraform Labs, an organization that provided two digital currencies, TerraUSD and Luna. TerraUSD was a “stablecoin,” designed to take care of a relentless worth of $1, whereas Luna was a extra conventional sort of cryptocurrency, with a worth that always fluctuated.

However the digital cash have been carefully linked. TerraUSD was supposed to take care of its $1 peg by means of algorithms connecting it to Luna. Because the crypto market boomed in 2021 and early 2022, the digital cash grew to become wildly fashionable, with Luna’s complete worth taking pictures to $40 billion.

When critics identified dangers within the cash’ algorithmic design, Mr. Kwon usually shut them down, with taunts like “I don’t debate the poor.”

Then his empire collapsed in a matter of days. In Could, the value of Luna declined, setting off a so-called dying spiral that introduced TerraUSD down with it. The crash wiped away tens of billions of {dollars} in worth in a single day and brought about a market meltdown that tanked the costs of Bitcoin, Ether and different fashionable cryptocurrencies. Buyers in Luna and TerraUSD misplaced every part.

Mr. Kwon got here beneath fireplace for his position within the implosion, remodeling from a number one business determine into considered one of its most infamous villains. In September, South Korean prosecutors charged him with violating the nation’s monetary legal guidelines, earlier than Interpol issued the pink discover.

In response to the arrest warrant, Mr. Kwon tweeted that he was prepared to cooperate with the authorities. “I’m not ‘on the run’ or something related,” he stated. Prosecutors responded that Mr. Kwon was “clearly on the run,” based on Yonhap, the South Korean information company.

Mr. Kwon has additionally come beneath scrutiny in the US. In February, the Securities and Change Fee charged him with orchestrating “a multibillion-dollar crypto asset securities fraud.”