A Montenegrin court has overturned a decision to release former crypto mogul and Terraform Labs co-founder, Do Kwon, on bail along with his former chief financial officer, Han Chong-joon. According to a report by Bloomberg, the Basic Court in Podgorica had earlier approved their release on bail to the tune of €400,000 ($430,500), but the prosecution quickly appealed the ruling, leading to the case being sent to the higher court for a final decision. The two were arrested in March at the request of US authorities over allegations of money laundering through their crypto exchange, Terraform Labs, but they deny the charges and have been fighting extradition to the US.

Kwon and Chong-joon’s legal woes started in August 2020 when they were arrested on charges of abuse of power and money laundering, which both refuted. Nonetheless, the outcome of their legal proceedings could have serious implications for the cryptocurrency industry’s reputation, with the arrest of high-profile crypto figures on financial crime charges reinforcing negative perceptions of the sector, hence, hindering mainstream investor adoption.

The revocation of Kwon and Chong-joon’s bail illustrates the challenges the crypto industry faces navigating a complex and constantly evolving regulatory landscape. The industry will need to prioritise compliance and work closely with regulators to ensure they create a sustainable and trustworthy ecosystem.

Do Kwon is a prominent figure in the crypto community, co-founding Terraform Labs, which created the stablecoin Terra (LUNA). Nevertheless, since Kwon’s arrest, the value of the stablecoin has declined significantly to $0.000083, despite its 1:1 peg to the US dollar. The fate of Kwon and his former CFO remains uncertain, with the possibility of additional motions and appeals in the coming months.