Founder of Terraform Labs arrested in Montenegro

Law caught the founder of Terra, Do Kwon. According to a tweet by the country s interior minister Filip Adzic, the founder of Terraform Labs has been arrested in Montenegro. Interior Minister said Kwon was detained at the airport in Podgorica with falsified documents.

Filip Adzic said in a post on Twitter:

Kwon has been the target of several investigations that have taken place in many countries including the United States before his arrest. Kwon was charged with a charge of fraud by the SEC in connection with the collapse of the TerraUSD Stablecoin. He was even on Interpol's red notice after the stable coin terraUSD UST and its $40 billion ecosystem went awry last year, sending shockwaves across the crypto markets.

In May 2022, TerraUSD UST collapsed and lost most of its value, causing the life savings of investors to be wiped out as traders offload the coin. Terra was ranked among the top 10 most valuable cryptocurrencies before the collapse. A few months later, South Korea issued an arrest warrant for Terra founder Do Kwon after he went into hiding.

The SEC charged Do Kwon and his company, Terraform Labs, with fraud about a year later, alleging that they orchestrated a multibillion-dollar criptocurrency asset securities fraud.

From April 2018 to the collapse of the TerraUSD scheme in May 2022, Terraform and Kwon raised billions of dollars from investors by offering and selling an unregistered suite of criptocurrencies, many of which were offered in unregistered transactions.

These included mAssets, security-based swaps designed to pay returns by mirroring the price of US companies, and Terra USD UST, a crypto asset security that was supposedly maintained by being interchangeable for another defendants' LUNA.

Like many stable coins, UST was pegged at a 1 to 1 ratio with the dollar. Minting one new UST required burning or destroying one luna. Arbitrage opportunities were key to maintaining the peg because of this structure. The collapse of Luna and TerraUSD roiled the world's criptocurrency markets in May 2022. Terra Luna, the coin associated with TerraUSD UST, suddenly collapsed overnight, losing 99% of its value as investors lost their life savings.

Kwon, who founded the Terraform Labs, has been accused of fraud by investors in the wake of the collapse.

Terra, which was ranked among the top 10 most valuable cryptocurrencies, dropped from its $120 peak last month to below $1 on May 13. Terra s luna UST is a controversial stable coin designed to support UST's one-to-one peg with the U.S. dollar. The UST platform and its sister criptocurrency luna lost $60 billion due to the implosion of the Terra platform.