As a reminder, Do Kwon’s situation is now not one to be envied. He was arrested in Montenegro in March, from where he was trying to fly to Dubai using forged documents that were allegedly issued in Costa Rica. It was this very moment that ended up causing further problems for the former businessman.

According to lawyers, Do may first need to spend time in a local prison for using forged documents before taking responsibility for financial fraud involving cryptocurrencies. The collapse of his project, in particular, resulted in tens of billions of dollars in losses for Terra and UST investors. Well, Kwon himself made huge sums of money through the linking mechanism between the LUNA token and the former UST stabelcoin.

According to experts, Kwon will spend the next year in a Montenegrin prison, which has far from the best conditions. South Korea, not the US, would have the greatest potential to extradite Doe Kwon, the creator of Terra. Read more about this in a separate article.

Where did the money from Terra go?

According to Cointelegraph’s sources, the amounts mentioned above are not subject to seizure and are not under the jurisdiction of South Korean authorities. This is mainly because Do Kwon allegedly converted most of the funds into Bitcoin using foreign cryptocurrency exchanges.

Apparently, these coins are now on some kind of hardware wallets that the authorities can't reach. And that makes sense, because if illegally obtained crypto-assets were stored on centralized exchanges, the latter would necessarily help freeze the coins and then hand them over to the authorities. And since that's not happening now, it means the situation is quite different.

An early SEC investigation into the Terra collapse revealed some interesting details. Specifically, Kwon withdrew about $100 million worth of bitcoins from the project after its collapse. Well, according to another publication, based on SEC officials’ interviews with former Terraform Labs employees, Kwon is also accused of stealing $80 million a month before the startup’s ecosystem collapsed.

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Following the revelation of the withdrawal, South Korean authorities demanded that major cryptocurrency exchange Binance suspend all withdrawal requests related to Kwon. Binance representatives confirmed that the trading platform is cooperating with the prosecutor’s office and offering any assistance needed. Here is the relevant rejoinder on the matter.

We have provided the Korean authorities with the requested assistance. As we are unable to comment on ongoing investigations, please contact prosecutors for any further comment.

South Korean prosecutors are actively tracing assets linked to Terraform Labs executives. This is to recover some of the illicit funds generated by the Terra collapse. On 3 April 2023, real estate and other property was therefore seized, which would prevent former Terra employees from selling items that may figure in the current litigation.

In addition to the houses in Seoul owned by former Terra CEO Shin Hyun-seong and others, prosecutors have also filed foreclosure actions against their overseas cars, as well as land in Hwaseong and Gapyeong in Gyeonggi-do province and Daean in Chungcheong province.

Unfortunately, once the funds are converted to crypto, the task of recovering the funds becomes much more difficult, even if Kwon only transferred money in Bitcoin. We would like to believe that Terra investors will wait for their refunds, or at least a portion of them.


We think it might still be possible to get to the digital assets, since Do Kwon knows about their whereabouts one way or another. The authorities should persuade him that the ex-businessman should be given the assets after all. However, the fate of this money will surely be decided after Kwon is extradited, since the only claim against him in Montenegro is forged documents. So it remains to monitor the case and wait for the prosecutor's office to act.