SINGAPORE - The fugitive co-founder of Singapore-based Terraform Labs, the cryptocurrency firm behind the infamous Terra/Luna tokens that crashed in 2022, was charged with fraud by US prosecutors in New York on Thursday.

This was hours after the authorities in Montenegro arrested him as he prepared to board a flight.

Do Kwon, a South Korean national, faces eight counts, including wire fraud, commodities fraud, securities fraud and conspiracy to defraud and engage in market manipulation.

Montenegro Interior Minister Filip Adzic said on Twitter that Kwon was detained at the airport of the European country’s capital Podgorica with false documents.

Also detained was Terraform Labs’ chief financial officer Hon Chang Joon.

Media reports said it was unclear if Kwon’s arrest was at the request of the US authorities.

Terraform Labs, a firm registered in Singapore but not under the regulator’s purview as it is not licensed, was behind the original stablecoin TerraUSD and sister token Luna.

Both crashed spectacularly last May, costing investors more than US$40 billion (S$53 billion).

According to the US indictment, Kwon allegedly deceived investors about aspects of the Terra blockchain, including its technology and the extent to which it had been adopted by users.

The indictment said he made false and misleading statements in a TV interview and on social media about the alleged scheme.

US prosecutors also accuse Kwon of misleading purchasers of cryptocurrencies issued by Terraform Labs, including Luna and TerraUSD, also known as UST.

Kwon is also said to have engaged in market manipulation with an unnamed US trading firm to alter the market price of UST.

Kwon’s arrest comes after the United States Securities and Exchange Commission (SEC) in mid-February charged Terraform Labs and him with orchestrating a multibillion-dollar crypto asset securities fraud.

According to the SEC’s complaint, from April 2018 until the scheme’s collapse in May 2022, Terraform Labs and Kwon raised billions of dollars from investors by offering and selling an interconnected suite of crypto asset securities, many in unregistered transactions.

The SEC accused Kwon and his firm of committing fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.

The crash of TerraUSD and Luna triggered the fall of many crypto firms, including prominent ones such as hedge fund Three Arrows Capital, Singapore lender Hodlnaut, brokerage Voyager Digital and lender Celsius Network.

TerraUSD and Luna’s collapse eventually sparked a massive crypto winter or market sell-off that has yet to recover, given the rising interest rate environment.

In March, the Singapore police said they had started a probe linked to Terraform Labs.

Last September, South Korea issued a warrant for Kwon’s arrest and he left Singapore.

South Korea has said Kwon, who previously denied any wrongdoing, is the subject of an Interpol red notice, or international wanted notice.

The 31-year-old faces charges of fraud and breaches of capital markets law in South Korea.

In February, he was believed to be in Serbia. He previously denied that he was in hiding, but did not reveal his whereabouts.