BELGRADE – ​A court in Montenegro has agreed to release Do Kwon, a cryptocurrency entrepreneur charged in the United States with a multibillion-dollar fraud, on bail of €400,000 (S$585,600), pending a trial on local charges.

The South Korean is the former chief executive officer of South Korea-based Terraform Labs, the company behind the stablecoin TerraUSD that collapsed in May 2022 and wiped out about US$40 billion of investors’ money and shook global crypto markets.

Following his arrest in Montenegro in March, the US District Court in Manhattan made public an eight-count indictment against Kwon for securities fraud, wire fraud, commodities fraud and conspiracy.

He was detained with Han Chang-joon, Terraform Labs’ former finance officer, who will also be released on bail of €400,000. 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.

“The court... found that the possibility of losing the posted bail of €400,000 each works sufficiently to dissuade them from any desire to flee,” the court in Montenegro’s capital Podgorica said in a statement on Friday.

At a hearing on Thursday, the defendants denied any wrongdoing over the charges pressed by the Montenegrin prosecutor. They told the court they have property worth millions and that the bail would be posted by their wives.

Prosecutors are appealing the decision, and the defendants will remain in custody pending the outcome of that appeal. If released, the two suspects would be confined to house arrest and banned from leaving the apartment.

Montenegrin police arrested Kwon and Han at Podgorica airport as they tried to board a flight to Dubai.

The police later said they had found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers and other devices in their luggage.

Both Seoul and Washington are seeking the extradition of the pair and the handover of the computers.

Kwon, whose real name is Kwon Do-hyung, is facing two cases in Montenegro – the first involving his alleged possession of forged travel documents and the second regarding his possible extradition.

Prior to his arrest, he had been on the run for months after fleeing first South Korea and then Singapore ahead of the company’s crash in May 2022.

In September 2022, South Korean prosecutors asked Interpol to place him on the red notice list across the agency’s 195 member nations and revoked his passport.

Kwon’s TerraUSD was marketed as a “stablecoin”, which is typically pegged to stable assets such as the US dollar to prevent drastic fluctuations in prices.

Cryptocurrencies have come under increasing scrutiny from regulators after a string of recent controversies, including the high-profile collapse of the exchange FTX.

The digital currency sector has also been hit hard by the demise of US crypto lenders Silvergate and Signature amid a string of banking failures earlier in 2023 that rattled global markets. REUTERS, AFP