Montenegro court scraps bail for crypto entrepreneur Do Kwon

FILE PHOTO: Do Kwon, the cryptocurrency entrepreneur, who created the failed Terra (UST) stablecoin, is taken to court in handcuffs, to face charges of forging official documents, in Podgorica, Montenegro, March 24, 2023. REUTERS/Stevo Vasiljevic

SARAJEVO (Reuters) - A higher court in Montenegro on Wednesday scrapped bail of 800,000 euros ($880,640) previously granted to Do Kwon, a cryptocurrency entrepreneur charged in the U.S. with a multibillion-dollar fraud, and his ally pending a trial.

Do Kwon, a South Korean national, is the former CEO of South Korea-based Terraform Labs, the company behind the stablecoin TerraUSD that collapsed in May 2022, roiling cryptocurrency markets.

He was detained in March along with Han Chang-joon, Terraform Labs' former finance officer, as they tried to board a flight to Dubai at the airport of Montenegro's capital Podgorica. The pair were charged with forging official documents and a court in Podgorica ordered them to be placed in a 30-day pre-trial detention.

They remain in pre-trial detention.

The higher court agreed with a prosecutor that a bail of 800,000 euro could not be taken as a solid guarantee, nor the duo's promise they would not run away once they are released from detention, the court's spokeswoman told local media.

The prosecution maintained that the defendants, once released from detention, would have no interest to stay in Montenegro where they would await their extradition.

Following Do Kwon's arrest, the U.S. District Court in Manhattan made public an eight-count indictment against him for securities fraud, wire fraud, commodities fraud and conspiracy.

The defendants, who at a hearing earlier in May denied any wrongdoing over the charges pressed by the Montenegrin prosecutor, told the court they have property worth millions and that the bail would be posted by their wives.

Police said after arresting them they had found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers and other devices in their luggage.

South Korean and U.S. authorities sought extradition of Do Kwon and Chang-joon and the handover of the computers.

($1 = 0.9084 euros)

(Reporting by Daria Sito-Sucic; Editing by Alexandra Hudson)

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