Do Kwon, cofounder of the failed algorithmic stablecoin Terra, pleaded not guilty in a Montenegrin court on Thursday after he was charged there with attempting to use forged travel documents.
In March, Kwon was arrested at the airport in Montenegro’s capital of Podgorica along with Terraform Labs CFO Han Chang-joon—who also pleaded not guilty—as they tried to board a private jet to fly to Dubai.
The pair allegedly held falsified Costa Rican and Belgian passports, as well as travel documents from their native South Korea, according to Interpol and Montenegrin authorities. Kwon and his associate said in court on Thursday that the Costa Rican passports were authentic, according to Bloomberg.
About a year ago, Terra, the stablecoin Kwon and his company created, collapsed in a crypto bank run that threw off the algorithmic balancing act the token tried to maintain with its sister cryptocurrency, Luna, to hold its peg to the U.S. dollar. The collapse destroyed tens of billions of dollars in value, but not before those involved in the project took 463 billion won, or more than $340 million, in illegal profits, South Korean officials said last month.
Kwon is now facing up to five years in prison in Montenegro. Meanwhile, authorities in South Korea and the U.S. are looking to extradite him. The charges Kwon faces in Montenegro have delayed those plans for now.
Although he maintains that he wasn’t on the run, authorities hadn’t been able to locate him since South Korea issued a warrant for his arrest in September. Interpol put out a red notice for Kwon, alerting governments worldwide that he was wanted, as rumors surfaced that he was hiding out in Dubai and later Serbia.
Kwon, seemingly unbothered, continued to tweet and even made an appearance with “Pharma Bro” Martin Shkreli on a livestreamed crypto podcast, where the ex-convict told Kwon that “jail’s not that bad.”
On Thursday, Kwon’s lawyer asked for the court to release the disgraced CEO and his CFO on a bail of 400,000 euros each, or about $436,000, and allow them to await trial under house arrest. The prosecutor argued Kwon was a flight risk and that he and his associate had plenty of resources at their disposal, according to Bloomberg. The presiding judge has not yet ruled on whether bail will be granted.
Last month, South Korean prosecutors charged Kwon’s Terraform Labs cofounder, Daniel Shin, with fraud, breach of duty, and embezzlement for his role in Terra’s historic collapse.
Kwon’s plea comes as federal prosecutors in the U.S. have cracked down on those using privileged information to profit both with cryptocurrencies and NFTs. Last week, former OpenSea employee Nate Chastain was found guilty of using insider knowledge of which NFTs were to be listed on the marketplace’s homepage to personally profit.
And on Tuesday, former Coinbase employee Ishan Wahi was sentenced to two years in prison for tipping off his brother and a friend to upcoming cryptocurrency listings on the exchange in a scheme that brought in $1.5 million, according to the Department of Justice.