PODGORICA, Montenegro >> Police in Montenegro have arrested Terraform Labs founder Do Kwon, who is wanted in South Korea in connection with a $40 billion crash of the firm’s cryptocurrency that devastated retail investors around the world, the European country’s interior minister said Thursday.

“Montenegrin police arrested an individual who is believed to be one of the most wanted fugitives, South Korean citizen Do Kwon,” Interior Minister Filip Adzic said on Twitter. South Korea’s Justice Ministry on Friday confirmed the arrest of Kwon and another unidentified individual linked to the cryptocurrency crash and said it will proceed with steps to extradite them to South Korea. Both South Korea and Montenegro are signees to the European Convention on Extradition.

South Korea asked Interpol in September to circulate a “red notice” for the 31-year-old Kwon across the agency’s 195 member nations to find and apprehend him.

Kwon and the other man had been hiding in Serbia but moved to Montenegro after South Korean investigators tracked their whereabouts and asked Serbian authorities to detain them, the ministry said. The men were arrested at Montenegro’s Podgorica Airport while trying to depart for Dubai using fake Costa Rican passports, the ministry said.

Kwon and five others connected to Terraform are wanted because of allegations of fraud and financial crimes in relation to the implosion of its digital currencies in May 2022.

TerraUSD was designed as a “stablecoin,” which are pegged to stable assets like the U.S. dollar to prevent drastic fluctuations in prices. However, around $40 billion in market value was erased for the holders of TerraUSD and its floating sister currency, Luna, after the stablecoin plunged far below its $1 peg in May.

———

AP writer Kim Tong-hyung contributed to this story from Seoul, South Korea.