Montenegro has charged South Korean citizen Do Kwon, the former CEO and co-founder of cryptocurrency company Terraform Labs, with forgery after police confirmed his identity and that of another South Korean, Chang Joon, who was also charged.
Do Kwon and his business partner Hon Chang Joon were questioned on March 24 by the Basic State Prosecutor's Office in Podgorica, the Montenegrin Interior Ministry said. They were detained a day earlier while trying to flee to Dubai with falsified documents, according to the ministry.
Do Kwon's lawyer, Branko Andjelic, told AFP that his client denied possessing any false documents.
The Basic Court in Podgorica announced later on March 24 that the two men were taken into custody because they are considered a flight risk.
"The suspects were detained due to circumstances that indicate a risk of escape, as they are foreign nationals with a residential address in Singapore, and their identities cannot be established beyond doubt," the Basic Court said in a statement.
The suspects can be detained for a maximum of 30 days, the court said.
Montenegrin authorities said on March 23 that Do Kwon and a companion had used "falsified travel documents from Costa Rica" during passport control for a flight to Dubai. Inspection of their luggage revealed travel documents from Belgium and South Korea. Interpol checks showed the Belgian documents were forged, the ministry added.
Do Kwon is suspected in the loss of investments worth more than $40 billion, Interior Minister Filip Adzic said.
Do Kwon is wanted by the United States, South Korea, and Singapore for what the U.S. Securities and Exchange Commission (SEC) called "orchestrating a multibillion-dollar crypto-asset securities fraud."
"We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto-asset securities, most notably for Luna and Terra USD," SEC Chairman Gary Gensler said in a statement in February.
RFE/RL has sent an inquiry to U.S. authorities about whether they will seek the two South Koreans' extradition.
Terra USD was a crypto-asset security referred to as an "algorithmic stablecoin" that supposedly maintained its peg to the U.S. dollar by being interchangeable with Luna, another of Kwon's crypto-asset securities, the SEC said.
"We also allege that [Terraform and Kwon] committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors," he added.
An arrest warrant was issued by South Korea in September 2022 after Terraform Labs and its cryptocurrency crashed in May.
The arrest warrants named several people linked to the Terra USD and Luna cryptocurrencies, the BBC reported.
South Korean prosecutors previously asked Interpol to issue a red notice for Kwon, saying he refused to cooperate with their probe into the crash.
Many investors lost their life savings when Luna and Terra USD collapsed, falling to a value of near zero. The fallout from the collapse of Terraform Labs also affected the wider cryptocurrency market.