Do Kwon, Terraform Founder, Arrested in Montenegro in 2025: $40 Billion Crypto Collapse Case
Montenegro authorities detain Do Kwon, Terraform Labs co-founder, wanted globally for a massive $40 billion cryptocurrency fraud linked to TerraUSD's collapse.
Do Kwon, co-founder of Terraform Labs and the mastermind behind the failed stablecoin TerraUSD, was reportedly arrested at a Montenegro airport in 2024, according to the country's interior minister.
Authorities are currently verifying the identity of the detained individual, who is suspected of orchestrating one of the largest cryptocurrency failures in history, resulting in losses estimated at $40 billion.
Kwon has been a fugitive since late 2023, facing charges of securities fraud filed by regulators in the United States, South Korea, and Singapore. The U.S. Securities and Exchange Commission (SEC) accused him of illegally selling securities tied to TerraUSD and its associated cryptocurrency, LUNA.
TerraUSD was designed as a stablecoin pegged 1:1 to the U.S. dollar, maintained through an algorithmic relationship with LUNA. However, a sudden market crash in LUNA's value and declining investor trust disrupted the algorithmic balance, causing TerraUSD to lose its peg and triggering a massive market collapse.
The collapse wiped out nearly $18 billion in market value initially, with total losses possibly reaching $40 billion, as confirmed by the SEC. Singapore, where Terraform Labs was headquartered, and South Korea, Kwon's home country, actively participated in the international manhunt.
This event marked the beginning of a significant downturn in the cryptocurrency market, which has yet to fully recover. It also preceded further high-profile failures, such as the collapse of FTX, amplifying regulatory scrutiny.
In response, U.S. regulators have intensified their oversight of crypto companies, reigniting debates over whether cryptocurrencies should be classified as securities under SEC jurisdiction.
For more updates on cryptocurrency regulations and market developments, stay tuned to Zamona.
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