According to Bloomberg News, a court in Montenegro has reversed an earlier decision to grant bail for Do Kwon, the co-founder of Terraform Labs. A court official stated that the high court in the capital of Montenegro had upheld the judgment, keeping Kwon in prison. Han Chong-joon, the former Chief Financial Officer of Terraform Labs, is also subject to this decision.
After the prosecution filed an appeal challenging the $436,000 apiece bail sum imposed for Kwon and Han, the matter was moved to the High Court in Podgorica. Following the failure of Terra, the initiative that produced the algorithmic stablecoin TerraUSD, which saw a sharp decrease last year, Kwon had been eluding law enforcement for a number of months.
Prosecutors in Montenegro charged Kwon and Chong-joon with forgery last month, citing their participation in the use of forged passports from Belgium and Costa Rica. Both people have entered a not-guilty plea to the accusations.
Since September, Kwon had been the target of search warrants in South Korea, which finally resulted in his arrest in March. Kwon and Terraform Labs are being sued by the Securities and Exchange Commission (SEC) in the US for scamming investors. The SEC said that Kwon and his business often misrepresented the token’s worth in order to promote cryptocurrency with the promise of price growth. Additionally, the lawsuit emphasized TerraUSD’s prior departure from its peg in May 2021.
An algorithmic stablecoin called TerraUSD uses market incentives and algorithms to keep its price stable. It was formerly the biggest algorithmic stablecoin, but it lost a lot of value and caused investors to lose a lot of money. U.S. senators and Treasury Secretary Janet Yellen took notice of the situation and asked for further regulation of stablecoins because of the potential hazards to financial stability.
Do Kwon’s continuing arrest highlights Terraform Labs’ ongoing difficulties and the scrutiny algorithmic stablecoins are facing as the court procedures advance. The cryptocurrency community and regulatory bodies will be keenly watching the case’s result since it might have an impact on stablecoin rules and investor protection policies in the future.