Do Kwon heading into extradition custody in Montenegro after receiving bail: Report

June 15, 2023 Coin Telegraph

The Terra Labs co-founder will be held for up to six months while the Montenegrin court considers South Korea’s extradition request.

Terraform Labs co-founder Do Kwon will reportedly be taken into extradition custody in Montenegro, according to a report by the regional edition of Radio Free Europe (RFE). He also faces questions about ties to a local political figure.

A spokesperson for the High Court of Montenegro told RFE that Kwon was ordered into custody for six months while the court decides on South Korea’s extradition request for him. A Seoul court issued an arrest warrant for Kwon in September. His case has been called “the largest financial fraud or financial securities fraud case that has ever happened in South Korea.”

The United States has also requested Kwon’s extradition to face charges by federal prosecutors and the U.S. Securities and Exchange Commission.

The Montenegrin Basic Court has scheduled a hearing on June 16 on charges against Kwon and former Terraform Labs chief financial officer Han Chong-joon of falsified travel documents. They were arrested on March 23 at the airport in Podgorica, Montenegro, while attempting to depart for Dubai.

Kwon is also expected to be questioned by the Special State Prosecutor’s Office about his ties to politician Milojko Spajić. Kwon claimed to have had contact with Europe Now party leader Spajić in a letter he sent to several officials just days before the latest round of elections in Montenegro.

Spajić denied ties to Kwon, but their alleged connection and possible financial contributions from Kwon were heavily covered by news outlets in the country.

Korean media reports that for years, Do Kwon had secretly been sponsoring a prominent Montenegrin politician using illegal funds. Two days ago, a Montenegro high court approved Do Kwon's bail request again, allowing for his release from prison. https://t.co/aNqYkKG70H
— FatMan (@FatManTerra) June 9, 2023

Lawyers for Kwon and Chong-joon initially received approval for their proposed 400,000 euro ($436,000) bail for each man, but that decision was reversed on appeal before the appeal was dismissed.

Terraform Labs’ Terra ecosystem collapsed in May 2022, leading to losses estimated at up to $40 billion.

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Jump Trading seeks to move Terra class action suit to California

June 13, 2023 Coin Telegraph

Coin Telegraph

The lawsuit, initially filed on May 9, alleges the firm and its CEO was involved in a price manipulation scheme tied to the TerraUSD stablecoin.

Algorithmic and high-frequency trading firm Jump Trading is seeking to have the class action lawsuit against the firm moved from Illinois to a Northern district court in California, arguing that it would significantly speed up legal proceedings.

The lawsuit was initially filed on May 9 by Taewoo Kim, individually and on behalf of others impacted by the collapse of the Terra/Luna ecosystem. Kim is represented by Selendy Gay and Robbins Geller Rudman & Dowd LLP.

Jump Trading embroiled in controversy as lawsuit claims it manipulated TerraUSD's value. Accusations of violating regulations and unjust enrichment put the company under the legal microscope.
— Cointelegraph (@Cointelegraph) May 14, 2023

The suit alleges that Jump Trading and its CEO, Kanav Kariya, were involved in a price manipulation scheme tied to the infamous TerraUSD stablecoin, which allegedly resulted in $1.3 billion worth of profit for the company.

Additionally, the firm and Kariya were accused of violating Commodity Exchange and Commodity Futures Trading Commission regulations and of common law unjust enrichment.

In the latest motion, filed on June 9, the defendants argued that the choice to file the suit in Illinois was an “attempt at forum shopping,” as the main plaintiff is a New Jersey-based resident represented by law firms from New York and California.

The term “forum shopping” refers to the practice of selecting courts or jurisdictions that supposedly have the most favorable rules or laws that support the position of the plaintiff.

*Excerpt from motion to transfer venue. Source: CourtListener*

“There is no legally compelling connection to Illinois, and nearly all of the relevant witnesses and documents either are located outside Illinois or are just as easily accessed elsewhere,” the court doc reads.

The defendants added that the plaintiffs also have a simultaneous and relevant suit that has been ongoing in California for over a year, and as such, both cases should be consolidated or coordinated.

“This case is not the first — or even second or third — to be filed on these facts. Rather, multiple lead plaintiffs have been litigating these exact same events for nearly a year in the Northern District of California in Patterson v. Terraform Labs, Pte. Ltd.,” the defendants argued, adding:

“This case should be transferred to the Northern District of California for consolidation or coordination with Patterson.[...] This action is likely to move faster in the Northern District of California, which has a year head start.”

Cointelegraph has reached out to the plaintiffs for comment, and will update the article if they respond.

The TerraUSD/LUNA project collapsed in May 2022, wiping billions of dollars from the market.

The project’s founder Do Kwon was arrested in Montenegro in March for allegedly using false travel documents. He is potentially on the hook to serve prison time in both the U.S. and South Korea.

Korean media reports that for years, Do Kwon had secretly been sponsoring a prominent Montenegrin politician using illegal funds. Two days ago, a Montenegro high court approved Do Kwon's bail request again, allowing for his release from prison. https://t.co/aNqYkKG70H
— FatMan (@FatManTerra) June 9, 2023

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Terra Founder Do Kwon Allegedly Moved $29,000,000 in Crypto Away From Luna Foundation Guard After Arrest: Report

June 10, 2023 The Daily Hodl

Do Kwon could serve prison in both US and South Korea, prosecutor says

June 8, 2023 Coin Telegraph

Coin Telegraph

South Korean prosecutor Dan Sunghan says Kwon’s extradition to South Korea makes more sense but adds that the Terraform Labs co-founder could also serve time in the United States as well.

Terraform Labs co-founder and CEO Do Kwon may be subject to multiple sentences in the United States and South Korea, according to a senior South Korean prosecutor heading the investigation.

It is understood that Kwon is currently serving house bail in Montenegro after having his bail proposal granted by a Montenegro court on June 5. Both Kwon and Terraform Labs’ chief financial officer, Han Chang-Joon, are legally required to reside at Chang-Joon’s legal residence in Montenegro while a decision about extradition is made.

Speaking to Bloomberg, Dan Sunghan revealed that Kwon’s extradition to South Korea made better sense “when it comes to bringing justice or recovering the damages for victims.”

*South Korean senior prosecutor Dan Sunghan speaking about the possibility of Kwon facing multiple sentences across the U.S. and South Korea. Source: Bloomberg*

According to Sunghan, most of the basic investigation around the collapse of the Terra ecosystem was done in South Korea. He further claimed local authorities have access to more evidence when compared to their American counterparts.

“The most efficient way to get justice is to have the investigation and trial take place in South Korea.”

Sunghan also stressed the fact that South Korean authorities have already indicted a number of Kwon’s co-conspirators.

However, when asked about the possibility of Kwon having to face a trial in both the U.S. and South Korea, Sunghan believed “such a scenario is an option.” A convict is subject to multiple cross-border sentences when they are yet to be prosecuted for some of the crimes in one of the jurisdictions, he explained.

Thus, Sunghan said if South Korean authorities don’t account for all the crimes Kwon is charged with within the U.S., then the entrepreneur could potentially be sent to the US for prosecution after serving his sentence in South Korea — which could be over 40 years alone.

The prosecutor expects Kwon’s sentence to be “the longest sentence ever handed down in South Korea.” Kwon’s cold wallet, which supposedly contains 10,000 Bitcoin (BTC), remains untraceable.

Sunghan confirmed that authorities can see funds being moved from the wallet in question. However, the location of the wallet and the process used to withdraw the funds remains a mystery.

“This is the largest financial fraud or financial securities fraud case that has ever happened in South Korea,” said Sunghan.

JUST IN: #DoKwon has been released on bail once again after Montenegro court dismisses prosecution appeal pic.twitter.com/zOlpLqU17S
— Crypto Rand (@crypto_rand) June 5, 2023

Kwon was held by Montenegro authorities on March 23 after he was caught trying to fly out of the country using fake documents. Soon after, both the U.S. and South Korean authorities requested his extradition to their respective countries. According to South Korean prosecutor Dan Sunghan, some extradition requests can take up to nine months for processing.

Meanwhile, South Korean authorities have started reviewing Binance’s acquisition deals in the country after the crypto exchange got into a legal battle with the United States Securities and Exchange Commission.

A local report suggests that South Korea’s financial watchdog — the Financial Service Committee — is reviewing Binance’s acquisition of local crypto trading platform Gopax.

In its review of the Gopax deal, the FSC pointed out that Binance’s alleged securities law violations and requests from the SEC to freeze Binance.US assets make it difficult to accept the acquisition request at this point.

Terra (LUNA) Creator Do Kwon’s Bail Conditions Appealed by Prosecutors: Report

May 21, 2023 The Daily Hodl

Montenegro prosecutors appeal against Do Kwon’s bail terms

May 18, 2023 Coin Telegraph

Coin Telegraph

Case files on the prosecutors’ appeal were sent to the Supreme Court in Podgorica for a decision.

Terra co-founder Do Kwon’s bail is now in question after the State Prosecutor’s Office filed an appeal against it. Kwon is still wanted for extradition by South Korea and has criminal charges to answer in the United States.

On May 17, the State Prosecutor’s Office in Montenegro’s capital Podgorica appealed against the previous decision of the court to grant Kwon and Han Chang-Joon a release from detention on bail of 400,000 euros ($436,000) each.

The bail deal was agreed on May 12, with the court agreeing to let Do Kwon be put under house arrest instead of being taken into custody. It took only one day for the court to decide on Do Kwon’s lawyers’ proposal. According to the documents, the bail would be entered into a “special section” of the court’s working budget if the house arrest is compromised.

Kwon and Chang-Joon were arrested by Montenegrin authorities in March 2023 at Podgorica airport for allegedly using false documents. The two previously had their passports confiscated in South Korea. In 2022, the Terra ecosystem created by Kwon and Terraform Labs imploded as its native TerraUSD (UST) stablecoin depegged, erasing an estimated $40 billion in market value in days.

Kwon still has over 233.3 billion Korean won ($176 million) in personal assets frozen as part of ongoing criminal proceedings. South Korean prosecutors are seeking his extradition, and U.S. prosecutors have charged him with eight separate counts, including commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation.

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SEC under fire for its custody rule: Law Decoded, May 8–15

May 15, 2023 Coin Telegraph

Coin Telegraph

Last week was harsh for the United States Securities Exchange Commission, with industry figures and officials publicly criticizing the regulator.

Last week was harsh for the United States Securities Exchange Commission (SEC), with industry figures and officials publicly criticizing the regulator.

May 8 was the deadline for feedback on the SEC’s proposed custody rule, and there was feedback aplenty. Andreessen Horowitz’s general counsel Miles Jennings called the proposal a “misguided and transparent attempt to wage war on crypto.”

The Blockchain Association claimed the rule exceeds the SEC’s authority, would inhibit advisers from transacting with crypto exchanges and leave investors’ assets at more risk. The chair of the United States House of Representatives Financial Services Committee, Representative Patrick McHenry, wrote that the SEC was exceeding its authority in the proposed rule, known as the registered investment adviser rule.

Another reason for criticizing the SEC was its “legal threat” to Coinbase in late March, accusing it of “possible violations of securities laws.” The U.S.-headquartered crypto exchange filed a complaint, supported by a U.S. Chamber of Commerce amicus brief last week.

The Chamber of Commerce threw its full weight behind Coinbase, accusing the SEC of deliberately creating a precarious and uncertain landscape for crypto companies operating in the country. Paradigm — the crypto investment firm led by Coinbase co-founder Fred Ehrsam — has also filed an amicus brief. According to the firm, regulatory uncertainty could lead to a “de facto ban on digital asset trading platforms” without a clear path to register with the SEC.

Finally, watchdog group Empower Oversight Whistleblowers and Research (EMPOWR) has filed suit against the SEC to force it to comply with a Freedom of Information Act request for access to communications between former Commission officials and their former and future employers.

EMPOWR claimed in its suit that the former SEC officials had a potential conflict of interest regarding cryptocurrency. The lawsuit specifically mentioned former SEC chair Jay Clayton, former enforcement division director Marc Berger and former director of corporate finance William Hinman.

Texas votes to add crypto to state’s Bill of Rights

State legislators in Texas have voted to amend the state’s Bill of Rights by adding a provision recognizing the right of individuals to possess, retain and utilize digital currencies. Bill HJR 146 — introduced by State Representative Giovani Capriglione — declares that individuals have the right to use a medium of exchange that is mutually agreed upon, which includes digital currencies, cash, coin, bullion, or scrip, for trading and contracting goods and services, and that this right cannot be violated.

Terra Luna founder Do Kwon’s bail terms officially accepted by Montenegro court

Montenegro has approved the bail terms proposed by lawyers for Terra founder Do Kwon, who was charged with the criminal offense of document forgery under Montenegrin law.

The court has accepted the proposed bail offer for Kwon and Terraform Labs chief financial officer Han Chang-Joon of 400,000 euros ($436,000) each. This is in addition to being put under house arrest instead of being taken into custody. According to the documents, if the house arrest is compromised, the bail will be entered into a “special section” of the court’s working budget. The current criminal trial in Montenegro is anticipated to start on June 16.

FTX founder Sam Bankman-Fried urges court to dismiss charges

FTX founder and former CEO Sam Bankman-Fried seeks to have up to 10 criminal charges against him dismissed in court, months ahead of his scheduled criminal trial in October. In court documents filed in the U.S. District Court for the Southern District of New York on May 8, Bankman-Fried’s legal team pushed to dismiss everything apart from three counts of conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.

Bankman-Fried was initially extradited to the U.S. from the Bahamas to face eight criminal charges of alleged fraud and money laundering. However, his legal team argues that four of the five additional charges, which have since been added, “violates the Treaty’s rule of specialty provision.” Under the “rule of specialty,” the requesting state (the U.S.) is generally bound to trial the extradited offender only for the offense for which they were extradited.

Jump Trading faces lawsuit over alleged $1.3B profit from TerraUSD

May 13, 2023 Coin Telegraph

Jump Trading faces lawsuit over alleged .3B profit from TerraUSD

Coin Telegraph

Jump Trading and its CEO Kanav Kariya are accused of violating United States regulations and unjust enrichment in the lawsuit.

A lawsuit filed in a district court in Illinois details Jump Trading's alleged involvement with Terra Labs in manipulating the price of algorithmic stablecoin TerraUSD (UST). According to court documents from May 9, the firm purchased millions of UST tokens in 2021 hoping to manipulate its value to reach $1.

Plaintiff Taewoo Kim is accusing Jump and its CEO Kanav Kariya of violating both the Commodity Exchange Act and the Commodity Futures Trading Commission (CFTC) regulations, as well as common law unjust enrichment.

According to the lawsuit, Jump Trading was an early partner and primary financial backer of Terraform Labs. Between November 2019 and September 2020, Jump entered into several agreements with Terraform and its affiliates "to borrow tens of millions of LUNA tokens" from Terra and "provide market-making services for transactions in LUNA, UST and aUST."

In exchange, the agreements would grant Jump Trading "the opportunity to purchase LUNA tokens at a steep discount, which could then be resold into the market to further Jump’s own profit."

According to the filing, in May 2021 — exactly one year before Terra's ecosystem collapsed - the UST stablecoin algorithm failed to keep its $1 peg, leading Terraform and its CEO Do Kwon to coordinate trades to prop the token price:

"Rather than publicly acknowledging the inability of TFL’s algorithm to maintain UST’s advertised peg price (which was fundamental to the perceived market value of UST and aUST), TFL and Kwon secretly schemed with Defendant Jump to manipulate the market prices for UST and aUST by making secret, coordinated trades to prop up UST to its $1 peg."

The purported scheme involved Jump purchasing more than 62 million UST tokens between approximately May 23 and May 27, 2021, causing UST's price to artificially rise to $1, further increasing aUST's price as well.

To incentivize and reward Jump for its alleged manipulation of the markets, Terra and Kwon "agreed to modify the parties’ prior agreements and instead unconditionally convey to Jump more than 61.4 million LUNA tokens at a greater than 99% discount from their then-current market price. Jump later resold those LUNA tokens into the market at a staggering profit of over $1.28 billion," claims the court filing.

Cointelegraph reached out to Jump Trading regarding the lawsuit, but did not receive an immediate response.

Bloomberg reported on March 13 that U.S. prosecutors are examining a chat group discussion on Telegram involving Jump Trading, Alameda Research and Jane Street Group regarding a potential TerraUSD stablecoin bailout.

The U.S. Justice Department is also investigating the stablecoin collapse, which contributed to a $40 billion wipeout in the Terra ecosystem last May. Two agencies within the department — the Federal Bureau of Investigation and the Attorney’s Office for the Southern District of New York — have interrogated former staff at Terraform Labs in recent weeks.

Kwon was arrested in March in Montenegro for allegedly using false documents. South Korean and United States authorities are seeking his extradition. He is currently under house arrest after being released on bail for 400,000 euros on May 12.

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