The founder of the Luna crypto project, Do Kwon, is still in jail in Montenegro along with his colleague Han Chang-joon.
Yesterday, their lawyers officially requested their release on bail with the promise that they would remain in Montenegro.
The two defendants are in jail not for the failure of the original Earth/Moon project, but for falsifying documents. In fact, they were arrested in March at the airport in the capital, Podgorica, for being in possession of false documents.
Both South Korea, the men’s home country, and the US have requested their extradition, but Montenegro has so far refused.
In South Korea, they have been charged with violating the Capital Market Act, the law on investment contracts, and face a trial that could result in very harsh sentences.
Lawyers demand release of crypto founder Luna
A hearing was held at the Podgorica court yesterday, during which Do Kwon denied committing any crime, despite being found in possession of blatantly false documents.
His lawyers then requested that he be released on bail pending his trial, which is expected to begin in about a month, and proposed precautionary measures such as a ban on leaving the apartment where he lives in Podgorica and an obligation to report to the state authorities at regular intervals.
At this stage, however, it does not appear that Do Kwon’s promises can be regarded as genuine, as he is known to have lied on dozens of occasions.
For example, during the hearing, he not only denied the crime of falsifying documents, but also pleaded not guilty.
In light of this, the lawyers asked the judge to lift the pre-trial detention in order to ensure the smooth running of the criminal proceedings. The proposed bail is only €400,000 each, a small crumb of the money they earned from the Earth/Moon project.
The public prosecutor has apparently rejected these demands, but it is still up to the court to make the official decision.
It is difficult to say what it will be, but the risk of absconding can still be considered high, as several months have passed between the time the warrant was issued and their arrest, during which time they have attempted to flee from one country to another.
The extradition of Do Kown, founder of Crypto Luna
It is considered possible that the possible extradition will not take place before the end of the criminal proceedings in Montenegro.
It is therefore conceivable that the two accused may seek some kind of solution before the end of the trial and possible extradition at a later date.
For the time being, however, it does not appear that the solutions they are seeking have proved effective, so unless the judge disagrees with the prosecutor, they will remain in prison for the time being.
If they are extradited, they will face other, very serious charges.
Since they do not appear to face particularly severe sentences in Montenegro, it is not unreasonable to imagine that the Montenegrin authorities would wait to extradite them until they have been convicted of the alleged crimes committed in the country.
However, it is difficult to imagine that they will not eventually be extradited to the US or South Korea, precisely because the arrest warrant issued by the South Korean authorities was an international one.
If the two do not find support in Montenegro, it seems rather difficult that they will not be handed over to the South Korean authorities once their trial in the European country is over.
The failure of Terra/Luna
In fact, the Terra ecosystem and Luna cryptocurrency still exist, although they are now called Terra Classic and Luna Classic (LUNC). However, Do Kwon and his associates are no longer part of the project team.
Before they fled, they had set up the so-called Terra 2.0 project, which took the name of the old project along with the new cryptocurrency, also called Luna.
However, this new project was also unsuccessful, so its future is very uncertain.
The current market value of the new cryptocurrency, LUNA, is 95 percent below its all-time high of 12 months ago, when it was born, while that of the old cryptocurrency, LUNC, is practically 100 percent below its highs of April last year.
Even if we look at the post-collapse trend, the loss since the September 2022 high is still 83%.
So these are two failed projects that are very unlikely to recover.
The million-dollar scam
According to several analysts, Earth/Moon could even be considered a fraud.
The main problem was the loss of the UST stablecoin peg to the dollar. The implosion of the entire Earth ecosystem was a consequence of this problem.
The cause of the loss of the peg was the fact that the UST was an algorithmic stablecoin backed by LUNA, and as soon as the price of this cryptocurrency began to fall very rapidly, the value of the UST’s backing fell below the face value of all the UST tokens issued. At that point, the collapse was inevitable.
There are those who believe that the creators of this ecosystem were aware that any large fall in the value of LUNA would have blown the peg with the UST dollar, and since the entire ecosystem was based on UST, it would have blown it completely.
However, it will be up to the authorities, particularly in South Korea, to determine the personal responsibility of Do Kwon and his associates in this affair.