Founder of cryptocurrency firm Terraform Labs imprisoned for forging documents

A court in Montenegro has sentenced cryptocurrency businessman Do Kwon, accused in the US of a multi-million dollar fraud, and his ally to four months in prison for using forged passports.

Kwon is the former CEO of South Korea-based Terraform Labs, the company behind the TerraUSD stablecoin that crashed in May 2022.

Local media reports that Kwon was detained in March along with Han Chang-joon, a former CFO of Terraform Labs, as they tried to board a flight to Dubai in Podgorica, Montenegro.

Both were accused of falsifying official documents and the Podgorica court of first instance placed both of them in pretrial detention for 30 days.

Police said that after arresting them, they found tampered with Costa Rican passports, a separate set of Belgian passports, laptops and other devices in their luggage.

The ruling follows a court hearing last week in which Kwon dropped his request to verify the authenticity of the Costa Rican passports after Interpol confirmed they were forged.

South Korean and US authorities have sought the extradition of Kwon and Han and the handover of the computers.

In late May, the high court threw out an 800,000-euro ($1.2 million) bail for the couple, saying it could not be taken as a solid guarantee, nor their promise that they would not run away once they were released.

The basic court said on Monday that time already spent in detention since the couple's arrest on March 23 would be included in the sentence, state television RTCG reported.

Rodic said he had not yet consulted with his clients about next steps and a possible appeal.

TerraUSD was designed as a "stablecoin", a currency pegged to stable assets like the US dollar to prevent drastic price fluctuations.