The disgraced former crypto titan Do Kwon may spend most of his life behind bars, first in his native South Korea and then in the US, according to a scenario laid out by a senior prosecutor in the Asian nation.

Both countries are seeking Kwon’s extradition on charges linked to the collapse of digital tokens he created, an implosion that blew up at least $40 billion. The 31-year-old was arrested in Montenegro in March, ending a spell as a fugitive.

It’s possible for a person to be tried and sentenced in both jurisdictions on distinct charges, starting with South Korea, said Dan Sunghan, who heads the probe into the fallen entrepreneur. Dan is the director of the financial crime investigation bureau at the Seoul Southern District Prosecution Service.

They could then “be extradited to the US and face trial there, and then have the sentence executed in South Korea and the US after that,” 49-year-old Dan said in an interview with Bloomberg News. He added he expects Kwon to get a record domestic sentence for a financial fraud case, exceeding four decades.

Defense lawyer Branko Andjelic, who has acted for Kwon in Montenegro, couldn’t be reached via phone for comment about the scenario laid out by Dan.

Project’s Wipeout

Kwon co-founded Terraform Labs Pte, which developed a stablecoin called TerraUSD that was meant to have a constant $1 value via a mix of algorithms and trader incentives involving a sister token, Luna. The edifice fell apart in May 2022, exacerbating a crypto-market rout and contributing to the downfall of a range of digital-asset outfits.

Terraform Labs didn’t immediately reply to an email seeking comment about Dan’s views on the case.

The US Securities & Exchange Commission in February accused Kwon and Terraform Labs of fraud. US prosecutors later followed up with an indictment.

South Korean charges include breaches of capital-markets law. Kwon’s representatives have previously said the US securities fraud charge is unfounded and rejected the allegations from the prosecutors in Seoul.

“This is the largest financial fraud or financial securities fraud case that has ever happened in South Korea,” said Dan, adding that Kwon should be extradited to the Asian nation first.

The SEC’s lawsuit said Kwon and Terraform Labs transferred over 10,000 Bitcoin out of their doomed project and turned some of the tokens into cash via a Swiss bank. The tokens were put into a so-called cold wallet that doesn’t sit on any digital-asset exchange, according to the complaint. The agency said Kwon and Terraform Labs periodically tapped the wallet since May last year.

Wallet Mystery

“We can see that it’s coming out of the wallet, but we are not aware who might be in possession of the cold wallet or how they’re withdrawing it, on what methods,” Dan said.

Prosecutors have seized 246.8 billion won ($190 million) in relation to the case and are about to gain control of a further 31.6 billion won, he added.

Kwon co-founded Terraform Labs in 2018 with Daniel Shin, who has also been indicted in South Korea but has rejected involvement in the TerraUSD and Luna implosion. Kim Ki-dong, a lawyer for Shin, previously said that Shin “has nothing to do with the Terra, Luna collapse as he left the company two years before the fallout.”

“The prosecution’s indictment is composed of baseless assumptions that contradict the objective facts,” Kim said in a statement Thursday. “We will explain the facts to court and are confident in establishing that the prosecution’s indictment is groundless.”

Kwon’s goal of creating a stable digital currency outside of mainstream finance attracted investors but also critics who said it was a Ponzi scheme. Kwon garnered over 1 million followers on Twitter, where he was at times brash and combative before falling silent as officials closed in on him.

Kwon has denied Montenegrin charges of using forged travel documents. Last week a court there again approved bail for him. There is no clarity yet on whether Montenegro will end up extraditing Kwon to South Korea or the US.

“It’s our understanding that the extradition process can take up to nine months, depending on how long the suspect has been in custody and so forth,” Dan said.

--With assistance from Emily Yamamoto, Rika Yoshida and Suvashree Ghosh.