Bail has been set at 400,000 euros, and the Terra founder will not be allowed to leave his apartment as part of bail conditions.

The decision comes after the court overturned the initial bail ruling. The decision was appealed seeking the same conditions of $428,000 for each defendant, along with monitoring measures and movement restrictions. The appeal has been accepted by the high court in Podgorica. Do Kwon and former Terra executive Han Chang-Joon, are currently detained in Montenegro for travelling using fake documents.

Terra collapse

Terra had become one of the fastest-growing blockchain networks in 2021, reaching a market capitalisation of $45 billion at its peak before the scheme collapsed. Its valuation included two tokens, Luna and TerraUSD (UST), an algorithmic stablecoin.

But when UST began to depeg in May 2022, the market capitalisation of these tokens fell dramatically, causing a route and panic which eventually led to the collapse of much of the ecosystem.

Both South Korea and the US have requested Kwon’s extradition to face criminal charges following the Montenegro trial. In February this year, the US Securities and Exchange Commission (SEC) charged Do Kwon and Terraform Labs with “orchestrating a multi-billion dollar crypto asset securities fraud” related to its algorithmic stablecoin and other cryptocurrencies.

We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.

Red notice

South Korean authorities had asked Interpol to issue a “red notice” for Kwon’s arrest and other Terra executives. The news came weeks after South Korean authorities issued an arrest warrant for Kwon and other executives in response to the ponzi-like collapse of the Terra ecosystem, in which the company backed its model by tokens issued out of thin air – much like FTX’s FTT token.

Terra’s downfall resulted in the loss of billions of dollars for investors and allegedly violated the country’s capital markets laws.

In the Montenegro case, defendants face up to a five-year prison sentence. Montenegro authorities are working with Belgium to establish the authenticity of the travel documents and id cards that the defendants allege were issued by Belgian authorities.

“When making this decision, the court took into account the evidence on the financial situation of the defendants provided by their defence counsel, the seriousness of the criminal offense for which the defendants are reasonably suspected, their personal and family circumstances, as well as the financial situation of the persons providing bail, and the opinion of the prosecution representative,” said Podgorica’s Basic Court in a statement.

The prosecution has three days to appeal the higher court’s decision.

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