Do Kwon denied appeal in Montenegro as possible extradition to South Korea or U.S. looms

Do Kwon, the creator of failed algorithmic stablecoin TerraUSD, will remain in prison after Montenegro’s highest court denied his appeal.

The disgraced former CEO of Terraform Labs and another company executive were sentenced to four months in prison by a lower Montenegrin court in June after being convicted of using a fake passport to try to flee to Dubai via private jet. Judges in Montenegro are separately considering whether Kwon will be extradited, with his native South Korea competing with the U.S. for the authority.

The collapse of TerraUSD and sister cryptocurrency Luna evaporated some $40 billion in value last May and left many retail investors penniless. Since then, the company behind the failed tokens has appointed an interim CEO and recently acquired a cross-chain portfolio manager.

Meanwhile, Kwon is facing a civil lawsuit for fraud in the U.S. brought by the Securities and Exchange Commission along with several criminal charges by the Justice Department over the collapse of TerraUSD and Luna. If he is extradited to South Korea, the head prosecutor pursuing Kwon said he will likely face the highest prison sentence ever in that country for a financial crime. Kwon has denied committing fraud.

After a warrant was issued for his arrest in South Korea in September 2022, Kwon fled his home in Singapore and spent months on the run from authorities, first in Serbia and then in neighboring Montenegro, a small country on the Adriatic Sea. Even while facing an Interpol red notice and with international authorities on high alert, Kwon claimed he wasn't on the run and couldn't disclose his location for security reasons.

During his time as a fugitive, Kwon continued to run Terraform Labs remotely, the company’s new CEO confirmed to the Wall Street Journal. Kwon stepped down in May.

Although Kwon was at one point set to pay 400,000 euros to be released on bail, that deal fell through. He is being held at Spuž prison near the Montenegrin capital of Podgorica, where he is allowed to go outside for one hour daily, according to the Journal. European officials have said the prison is cramped and poorly ventilated.

This story was originally featured on Fortune.com