On September 13, roughly four months after the complete collapse of algorithmic stablecoin terra and crypto token luna, South Korean authorities issued a warrant for founder Do Kwon’s arrest. Lo and behold, he was nowhere to be found.
Kwon left to Singapore before legal action could be taken against him regarding the thousands of investors now left empty-handed. To quiet down speculators, he tweeted on September 17 that he was not, in fact, on the run. He filmed interviews — for media outlets that he financially backed — in which he suggested the move to Singapore had always been the plan.
“For any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide,” a tweet read.
Less than two weeks after South Korea issued its arrest warrant, Interpol released a Red Notice. This was sent to all 195 member states and requested that local authorities bring in Kwon; the only countries and territories not included are North Korea, Taiwan, Palau, Tuvalu, Kosovo, and Western Sahara.
In December, Kwon was spotted by authorities in Serbia after appearing in Dubai, leaving some wondering why he chose to go there. Only, Serbia is a much more likely place for a crypto fugitive like Kwon to ensure they remain hidden.
Kwon fleeing to Serbia makes more sense than Singapore
Compared to South Korea, Singapore adopts friendlier regulatory policies and a state-sponsored investment fund, Temasek, which has backed several crypto projects. But it appears the country wasn’t friendly enough.
When exactly the Terraform Labs founder decided to depart Singapore is unclear. The time frame further coincides with the filing of a $57 million class action lawsuit against him in the country’s High Court, which was due at his doorstep any day.
It looks like he put some thought into where he would land next.
Serbia, where he was last reported to be located, is one of four countries that border Kosovo — which happens to be one of the only places without representation at Interpol. Serbia and South Korea have never signed an extradition treaty, yet have both agreed to the European Convention on Extradition. Meaning, Kwon would absolutely meet the criteria to be handed over by Serbia.
But there are other factors that make Kwon’s return less likely. Seung Jae-Hyeon, a researcher at the Korea Criminal Justice Policy Institute, said in an interview with Chosun Ilbo: “Extraditions need to be mutually beneficial. Serbia is still an unprecedented nation in this regard.
“If there is no incentive for Serbia, South Korea will need to exercise public power to secure extradition. It seems that it will be difficult to extradite [Kwon] in a short period of time.”
In Serbia and neighbouring countries, rules and regulations are possibly sidelined if you have enough cash and the borders allow for easy transit, making it likelier for a fugitive to make a getaway if need be. Serbia lies upon the Balkan Route, a known passage for trafficking drugs like cocaine and other illicit goods. In 2022, over 145,600 migrants made “irregular border crossings” into the EU via the Balkan Route, an increase of 136% compared to the previous year.
Black markets have thrived for decades, ever since the Bosnian and Kosovo Wars and the fall of genocidal dictator Slobodan Milošević. The economies of Bosnia and Herzegovina, Montenegro, Kosovo, Albania, North Macedonia, and Serbia are largely cash-based, leaving fewer digital footprints.
Getting cash in the first place might not be an issue, either. Serbia’s pro-crypto politics make it possible for a fugitive with a large amount of crypto to become liquid when need be. As Lee Hong-yeol, a former South Korean prosecutor, told Chosun Ilbo: “Serbia is a country that takes a positive stance toward many cryptocurrency-related matters. Last year, it legalized crypto trading, while mining activities are carried out with the active support of the government. Kwon seems to have chosen the country in an attempt to protect his funds.”
Kwon may find that local police are too busy with cases of Serbian crypto fraud to assist in his arrest. Last week, a €2 million crypto call center crime ring was taken down in Serbia, Bulgaria, and Cyprus by a cross-border operational taskforce supported by Europol. Fifteen arrests were made: 14 in Serbia and one in Germany. Investigators searched 22 locations, 15 of which were in Serbia, and found three hardware wallets with roughly $1 million in cryptocurrencies on it.
That said, the multimillion-dollar crackdown suggests that authorities are getting better at working across borders and agencies in order to safeguard cryptocurrency investors and capture fraudsters. Serbia, or anywhere for that matter, may not be a safe haven for long.
Kwon’s proof of life
After Reuters broke the news that Kwon had fled to Serbia, the normally boisterous, confident, and prolific tweeter went silent. He didn’t post for one month, until he sent out a single exclamation point “!” on January 9, in response to someone pointing out his radio silence.
Since then, reports of Kwon’s whereabouts are unclear. He may no longer be in the country.
When Protos reached out to Interpol, it replied that it “does not comment on specific cases or individuals.” It remains to be seen if Kwon decided to stay in Serbia or went to a neighbouring country. Perhaps he’ll join Zhu Su, Kyle Davies, and Mark Lamb way out in the United Arab Emirates.