Do Kwon, the founder of the collapsed cryptocurrency firm Terraform Labs, has been sentenced to four months imprisonment in Montenegro. Along with another South Korean national, Kwon was found guilty of using falsified travel documents. The sentence, handed down by a court in Podgorica, includes time served since their arrest on March 23rd while attempting to board a flight to Dubai using counterfeit Costa Rican passports.

Kwon's arrest in Montenegro stemmed from an international warrant connected to the staggering $40 billion collapse of Terraform Labs' cryptocurrency venture. This financial implosion devastated retail investors globally. Both South Korea and the United States have formally requested Kwon's extradition, although Montenegrin courts have yet to issue a ruling on these separate requests.

Kwon's legal representative, Goran Rodic, confirmed the court's decision, stating that they were found guilty of forging identification documents. Rodic indicated that he will be consulting with his clients regarding potential next steps, including the possibility of an appeal. South Korean authorities had previously issued an Interpol red notice for Kwon in September 2022, requesting his apprehension by member nations.

It is believed that Kwon and the other individual had been hiding in Serbia before relocating to Montenegro. South Korean investigators, having tracked their movements, requested Serbian authorities to detain them. Kwon, along with five other individuals associated with Terraform, faces allegations of fraud and financial crimes related to the May 2022 implosion of the company's digital currencies.

The collapse centered around TerraUSD, a stablecoin designed to maintain a fixed value pegged to the U.S. dollar. However, both TerraUSD and its linked cryptocurrency, Luna, plummeted in value, wiping out approximately $40 billion in market value and leaving investors with significant losses.