The protracted legal case continues against Kwon Do-hyeong, also known as Do Kwon, the disgraced founder of collapsed crypto company Terraform Labs.

Reuters has reported that a court in Montenegro on Friday said it has approved the extradition of Do Kwon from the Balkan state.

But it is not clear at the time of writing which country will Do Kwon be extradited to, as both South Korea and United States have sought his arrest, with South Korea being the first to issue an international arrest warrant.

On the run

The case began back in 2022, when Do Kwon had moved from South Korea to Singapore with his family following the collapse of his $40 billion digital asset project – which included the stablecoin Terra and its sister token Luna.

Terraform had issued the TerraUSD “stablecoin”, intended to maintain a 1:1 peg with the US dollar.

It is thought that nearly 250,000 people had invested in Terraform Labs’ coins, and blockchain analytics firm Elliptic estimated that investors in TerraUSD and Luna lost an estimated $42 billion.

The reclusive Kwon insisted neither he nor his company made money on the crash, but he did not exactly help his cause.

He is known for his caustic remarks about detractors, and told a YouTube crypto channel a week before the demise of TerraUSD, “95 percent [of coins] are going to die – but there’s also entertainment in watching companies die too.”

Just before the implosion he told followers on Twitter, “I love chaos.”

But on 13 May 2022 he tweeted, “I am heartbroken about the pain my invention has brought on all of you.”

After South Korea issued an international arrest warrant, and Interpol also issued a “red notice” for his arrest, Do Kwon was nowhere to be found.

Do Kwon had denied that he was in hiding or on the run, but he did not reveal his whereabouts after police in Singapore could not locate him.

In December 2022 South Korean police said they believed Do Kwon was hiding in Serbia, after he had travelled via Dubai to an unknown country after leaving Singapore.

Then in February 2023 the US Securities and Exchange Commission (SEC) “charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud.

Montenegro arrest

In March 2023 Do Kwon was arrested in Podgorica, the capital city of the Balkan country of Montenegro. Soon after that, both South Korea and the US sought his extradition to their respective jurisdictions.

Kwon and a second person identified as Han Chang-joon, Terraform Labs’ former finance officer, had been arrested when they tried to board a flight to Dubai.

Montenegrin police had charged the two suspects with forging official documents after police found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers and other devices in their luggage.

In May a higher court in Montenegro rescinded a 800,000 euro bail for Do Kwon due to flight risk concerns.

Then in June Do Kwon and Han Chang-joon were found guilty of forging official documents, and both were sentenced to four months in prison.

Kwon and Han had pleaded not guilty at their first court hearing in May, but then Do Kwon dropped his request to check authenticity of the Costa Rican passports, after Interpol confirmed they were fake.

Meanwhile in August US federal judge ruled that a fraud trial by the SEC against cryptocurrency issuer Terraform Labs and its founder Do Kwon could go ahead, denying the company’s motion to dismiss it.

Extradition approved

Now Reuters has reported that the High Court in the Montenegrin capital Podgorica on Friday has approved the extradition of Do Kwon.

The court decision means that it is now up to a government minister to decide if he will be handed over to South Korea or the United States.

It should be noted that Terraform Labs had said in July it would fight the “misguided and deeply flawed” US allegations.

The High Court however said that Do Kwon had agreed to be extradited to South Korea under an abbreviated procedure, but that the justice minister would have the final say as multiple states have requested his handover.

The decision will be made after Do Kwon completes serving his prison sentence for document forgery, the court said.

Do Kwon´s lawyer in Podgorica was not immediately available to comment, Reuters reported.