"Everybody's looking for me": The hunt for the most famous crypto fugitive

Kwon had been hiding in the Balkans for months, but his luck was running out. About two hours earlier that day, on March 23, someone anonymously informed the top police officer of Montenegro, Interior Minister Filip Adžić, that Kwon was probably in the country, writes The Wall Street Journal

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Photo: Luka Zeković
Photo: Luka Zeković
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

Failed crypto tycoon Do Kwon was ready to leave Montenegro. He and his colleague arrived at the main airport of the small Balkan state, where a Bombardier business jet was waiting to take them to Dubai.

In the VIP terminal, Kwon handed his passport to the customs officer, who swiped it through the reader. A warning appeared on the screen. Kwon, it said, was the target of an Interpol red warrant - a request that police around the world arrest him.

Kwon had been hiding in the Balkans for months, but his luck was running out. About two hours earlier that day, on March 23, someone anonymously informed Montenegro's top police officer, Interior Minister Filip Adžić, that Kwon was probably in the country, writes The Wall Street Journal.

An anonymous tipster sent Kwon's passport details to the phone of the Interior Secretary, who told The Wall Street Journal about the arrest.

When Adžić called the head of the border police, the police had just detained Kwon at the airport.

"Do you know who that person is?" the interior minister said he asked the boss. "He's famous and has a lot of money."

US and South Korean authorities have been investigating Kwon for his role in one of the biggest disasters in cryptocurrency history. In May 2022, two cryptocurrencies he created, TerraUSD and Luna, sank in value. The implosion wiped $40 billion from the cryptocurrency market and set off a chain reaction that pushed other digital crypto companies into bankruptcy. Investors around the world lost their savings.

The investigation concluded that he had lied to investors and was suspected of hiding wealth. He now faces charges in the United States and South Korea, including fraud and violating capital markets laws. Prosecutors in South Korea said that if convicted, he would likely face the longest prison sentence for financial crime in the country's history.

Kwon has denied the fraud allegations. But just before he could be arrested, he disappeared from his home in a luxury skyscraper in Singapore. He also teased the authorities via Twitter and gave interviews from an unknown location. Even after his arrest, he continued to stir up the public: The letter he sent from prison to the Prime Minister of Montenegro, Dritan Abazović, caused a major political scandal in the small federal state.

Now 32-year-old Kwon is sitting in a Montenegrin prison, where he is isolated. Officials discovered that the Costa Rican passport he showed at the airport was fake. The US and South Korea are fighting for his extradition. If he is sent to the US, he will likely end up in the same prison in New York that now houses Sama Bankman-Frida, another crypto tycoon whose companies were hit hard by the fallout from TerraUSD-Luna.

This story of Kwon's life on the run is based on interviews with officials from South Korea and Montenegro, current and former employees of his company, Terraform Labs, and people close to Kwon.

Kwon did not respond to requests for comment sent to his lawyer in Montenegro.

Steady guys

TerraUSD was a stable crypto, designed to maintain a price of $1. Crypto investors often use stable cryptocurrencies as a safe haven to store profits from successful trades. TerraUSD differed from many other stable cryptocurrencies because it was not backed by dollars in the bank. It has also been called an algorithmic stablecoin, relying on complicated financial engineering and the concerted efforts of traders to maintain $1.

Kwon declared TerraUSD to be the center of a new monetary system that is not subject to banks and governments. Some cryptocurrency watchers have warned that it's a ticking time bomb.

On May 7, 2022, the price of TerraUSD started to fall, scaring investors. The trigger for the decline was large withdrawals from Anchor Protocol, a type of pseudo-bank that offered investors annual returns of nearly 20% on TerraUSD deposits.

"Deployment of more capital - calm guys," Kwon wrote as TerraUSD fell. His team used a $3 billion reserve fund to shore up the stable cryptocurrency. They quickly tried to organize a rescue, but nothing worked.

Within days, TerraUSD was worth just a few cents.

Investors were furious. They poured billions into TerraUSD, most of it into Anchor, which many thought of as a savings account. Others are betting on Luna, a related cryptocurrency that has fallen more than 99%.

Although Terraform Labs was based in Singapore, Seoul may have been the epicenter of that decline. Kwon, a South Korean citizen who graduated from an elite foreign high school in Seoul and studied computer science at Stanford in California, was a figure of national pride. About 100.000 South Koreans have lost money on TerraUSD and Luna, according to South Korean officials. The complaints were submitted to the prosecutors' offices.

Dan Sung-han led the investigation. The boyish-looking 49-year-old head of the Department for Investigating Financial Crimes. Local media have dubbed this unit the Grim Reaper of Yeouido, alluding to Seoul's financial district, for their fight against fraud and stock market manipulation.

"It took us a long time to build a solid understanding of the crypto market," Dan said.

South Korean investigators raided Terraform's local office. They questioned current and former employees and seized evidence from seven South Korean crypto exchanges, taking away blue boxes filled with documents, laptops, smartphones and hard drives.

At the time, Kwon was living with his wife and newborn daughter in the luxury residential high-rise Sculptura Ardmore in Singapore. His duplex apartment included a 14-meter protruding outdoor pool. He had Japanese whiskey and Cuban cigars for guests.

The baby was born just weeks before the cryptocurrency crash. Kwon named it Luna, after his cryptocurrency.

"My favorite actual invention named after my greatest invention," he tweeted shortly after her birth, posting a picture of the newborn.

That summer, Kwon met friends at French and Japanese restaurants, including Les Amis, which has three Michelin stars. He discussed with some associates about visiting Europe with his family on an extended trip so that he could remain relatively anonymous in the new city.

At one party he attended in Singapore, several of the attendees were crypto entrepreneurs who came to show their support for Kwon. Crystal champagne and Martell XO cognac flowed freely, according to a person familiar with the event.

Meanwhile, Kwon's investors suffered.

In war-torn Ukraine, web designer Juri Popovic lost $9.000 he had hidden in TerraUSD because he didn't trust his country's banks. In the UK, a 36-year-old IT consultant lost more than $30.000. He said it took him two months to work up the courage to tell his wife. He started working as a window cleaner to pay the bills.

Kwonphoto: Boris Pejović

In Taiwan, local media reported that a man fell from the 13th floor of his apartment in an apparent suicide after informing friends and relatives that he had lost about $2 million on Luna.

In June 2022, Kwon told the Wall Street Journal via PR: "I am devastated by the recent events and I hope that all the families affected are taking care of themselves and their loved ones."

Singaporean law firm Drew & Napier was preparing to sue Kwon on behalf of a group of investors in TerraUSD who claim they collectively lost more than $50 million.

On September 6, 2022, Kwon celebrated his 31st birthday at home. His wife shared photos with friends of him enjoying a Korean meal with her and playing with their baby.

The next day, a representative from Drew & Napier arrived at Sculptura Ardmore to serve him with the lawsuit - but Kwon had already left.

Red warrant

On September 7, according to South Korean prosecutors, Kwon traveled to Dubai and then to Serbia. He settled in the capital city of Belgrade, known for its nightlife and technology sector.

Days later, South Korean prosecutors obtained an arrest warrant for Kwon on charges that he violated the country's capital markets law. They worked for hours, under great public pressure, to bring Kwon to justice. Dan, their leader, would sometimes take a nap on the black lounger in his office.

Among other alleged irregularities, Dan's investigators focused on the relationship between Terraform Labs and Chai, a South Korean payments app that at one point had two billion users.

Before the crash, Kwon had repeatedly claimed that Chai was using his Terra blockchain platform to transfer funds between users and merchants. That claim was a key selling point for investors who saw Chai's use of the Terra blockchain as a rare example of actual day-to-day use of blockchain technology. Supporters see blockchain — the underlying technology behind bitcoin and other cryptocurrencies — as a way to empower individuals while cutting out banks and other traditional intermediaries.

However, South Korean prosecutors claim that Kwon's claim was false. In reality, they claimed that Chai used traditional payment systems to settle transactions.

A lawyer for Chai's founder, Daniela Shin, said Chai initially used the Terra blockchain to process payments, but stopped doing so in 2020. Shin, Kwon's former business partner, has denied wrongdoing. Kwon's lawyers defended his statements about Chai.

"I'm not 'on the run' or anything like that," Kwon tweeted on Sept. 17 after news of the arrest warrant. He still refused to reveal his location, citing threats to his safety.

South Korean prosecutors filed a red warrant through Interpol, the global police organization, effectively asking police around the world to capture Kwon.

From Serbia, Kwon told a colleague from the crypto industry that he had an agreement with the local government. He told another that the Serbian police service allowed him to stay, even after they learned of the Interpol red warrant.

The Ministry of Internal Affairs, the Ministry of Justice, the Ministry of Foreign Affairs and the Chief Prosecutor's Office of Serbia did not respond to requests for an interview.

Kwon continued to operate Terraform Labs from shelter and pushed an unrealistic plan to rebuild the Terra blockchain. He was joking with colleagues in the Terra Rebirth League, a group on the Telegram app with more than 300 members, according to messages seen by the Journal.

When he arrived in Belgrade, Kvon lived in an apartment near Knez Mihailova, a pedestrian street in downtown Belgrade known for its shops, sidewalk cafes and 19th-century architecture, said Milojko Mickey Spajic, a Montenegrin politician who met him there.

Spajicphoto: Boris Pejović

Spajic told the Journal that Kwon invited him to visit and they spent about an hour talking over coffee, including about Kwon's ambitions for rebuilding Terra.

They had known each other since 2018, when Spajić - then a partner in Singapore-based DAS Capital - agreed to invest $75.000 in Luna. He later returned to his homeland and entered politics and hoped to make Montenegro a center for the development of blockchain technology.

Spajic said that at the time he did not know that Kwon was a fugitive.

On October 12, Kwon registered a company called Codokoj22 doo Belgrade, listing himself and Chang-joon Han as directors, according to Serbian company records.

Han is the former CEO of Terraform Labs and Chai who joined Kwon in the Balkans. Serbian records from December 2022 show that Han owns a 400-square-meter apartment in a wealthy part of Belgrade.

On November 8, Kwon appeared on UpOnly, a live cryptocurrency podcast. He spoke with another guest: Martin Škerli, a former hedge fund manager jailed on securities charges.

"Prison isn't that bad," Shkreli told him. "It's not pleasant, but it's not the worst thing in the world."

"Good to know," Kwon replied.

The pressure is mounting

Just days after Kwon left Singapore, investigators in South Korea learned through Interpol bureaus that he was in Serbia, said Dan, the chief prosecutor. On December 12, prosecutors in Seoul publicly confirmed his location. Kwon's Twitter activity dropped sharply.

Later that month, South Korea formally asked Serbia to arrest Kwon and extradite him.

At the end of January, Dan and an official of the Ministry of Justice of South Korea flew to Belgrade. Over the course of several days, they met with Serbian judicial officials. The Serbs shared details about the company Kwon founded and his internet address, Dan recalled. They promised to hand over Kwon if they caught him.

On February 16, the United States Securities and Exchange Commission filed fraud charges against Kwon, accusing him of lying about TerraUSD's stability and Chai's use of the blockchain. The agency also alleged that Kwon and Terraform Labs converted thousands of bitcoins into cash through a Swiss bank and withdrew more than $100 million after the crash.

Lawyers for Kwon and Terraform Labs criticized the SEC's lawsuit as excessive government intervention. They denied the allegations against the Swiss bank, claiming the money transfers were for business expenses and disputed the SEC's allegations against Chai.

On March 11th, Kwon posted his last message to the Terra Rebirth League. Responding to a fan's message in a private Telegram group, Kwon posted a picture of North Korean leader Kim Jong Un raising his hand in a triumphant salute.

Two days later, the Wall Street Journal reported that the United States Department of Justice was also investigating the TerraUSD case.


Kwon sneaked across the border into Montenegro in mid-March and took refuge in Petrovac, a coastal town on the Adriatic Sea, police claim.

On March 23, he and Han took a taxi to the airport in the capital Podgorica, a ride that normally takes about an hour. They paid the driver 4.000 euros ($4.230), a huge sum for ordinary Montenegrins.

After Kwon's passport caused an alarm, officials detained him and Han, and Han was also found to have a fake passport from Costa Rica. Border police searched the luggage and found three laptops, five phones and another set of fake passports from Belgium.

"Everyone is looking for me," Kwon then told the officers, according to Interior Minister Adzić.

Adzicphoto: Boris Pejović

Han protested their detention, according to Adzic, saying, "We are VIPs wherever we go." Han did not respond to requests for comment through his lawyers.

Hours later, federal prosecutors in New York filed fraud charges against Kwon. Soon, the South Korean ambassador appeared in Adžić's office to discuss the extradition.

A court in Montenegro convicted Kvon and Han for using fake passports. They were sentenced to four months in prison, but they can be held longer pending extradition. Kwon said he did not realize the passports were fake and that he had been duped by the agency in Singapore that obtained them.

After his arrest, Kwon was imprisoned in Spuž prison, in a valley near Podgorica. He was allowed to spend one hour a day outdoors, in a yard surrounded by barbed wire.

After being jailed, Kwon greeted his wife with tears in his eyes and expressed remorse for the trouble he caused her and their young daughter, a source familiar with the case said.

Kwon tried to post bail of 400.000 euros ($423.000), but prosecutors rejected his request, calling him a fugitive.

On June 5, a one-sided letter from Kvon arrived in the office of Montenegrin Prime Minister Dritan Abazović. The letter, written in Kwon's legible handwriting, described his friendly ties with Spajic, a politician who met with Kwon in Belgrade - and a rival of the current prime minister. Spajić's party was expected to win the elections, which were only a few days away.

Abazovicphoto: Government of Montenegro

According to a copy seen by the Wall Street Journal, the letter said Spajic tried to raise funds from Kwon and other "friends in the crypto industry."

Spajić denied that he asked Kvon for money. He said the letter was a trick devised by his political opponents and the Serbian secret police. That the Montenegrin authorities promised him release on bail if he wrote a letter.

The Serbian intelligence agency did not respond to a request for comment.

The letter caused a storm. Political rivals have attacked Spajić, who has created an image of an anti-corruption fighter, claiming that he has become close to a fugitive from the world of cryptocurrencies. Spajić's party narrowly won the elections on June 11, making him the future Prime Minister of Montenegro.

Kwon did not dispute that he wrote the letter. His Montenegrin lawyer, Goran Rodic, said that Kvon did not donate money to Spajic. The attorney declined to share more details, citing an open investigation.

European officials who visited Spuž prison last year said the cells were poorly ventilated and very hot during the summer. They also noted poor hygiene and overcrowding.

To fill his time, Kwon watches television with a limited number of English-language channels in his cell, his lawyer said on a sweltering day this summer.

"Given the current weather conditions and the general nature of being in prison, I think he's doing relatively well," Rodic said.

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