Both U.S. and South Korean officials are seeking the extradition of Terraform Labs CEO Do Kwon, just hours after he was arrested in Montenegro.

The U.S. attorney in New York charged the 31-year-old entrepreneur with an eight-count criminal indictment for defrauding U.S. investors who bought Terra USD and Luna. In a 12-page indictment unsealed Thursday, Kwon was charged with conspiracy to defraud and engage in market manipulation, conspiracy to defraud, and two counts each of wire fraud, commodities fraud, and securities fraud.

In early February, the U.S. Securities and Exchange Commission charged Do Kwon with fraud, accusing him of masterminding a multibillion-dollar securities fraud in crypto assets. The SEC alleges that Kwon marketed TerraUSD, a so-called "algorithmic stablecoin," and a series of interconnected digital assets as profit-making securities, claiming that the tokens would increase in value.

A South Korean court also issued arrest warrants for Kwon and five others for their alleged role in the $40 billion collapse of TerraUSD and LUNA, which dealt a heavy blow to global retail investors. The Seoul Southern District Prosecutor's Office requested Interpol to issue a "red notice" for the prosecutor on charges of manipulating the capital market. Kwon, who has been on the run since May 2022, denies any wrongdoing as he claims capital market laws do not apply to crypto assets.

Numerous law enforcement agencies and financial regulators, as well as Interpol, are already pursuing Kwon for his alleged involvement in the collapse of the terraUSD (UST) stablecoin and Terra ecosystem.

LUNA fell almost to zero within hours of peaking near $120, with a market cap of more than $18.5 billion. In addition, its sister stablecoin TerraUSD, or UST, lost its peg to the U.S. dollar before the crash.

Globally, investors in TerraUSD and Luna lost about $42 billion. To make matters worse, the debacle shook confidence in the broader cryptocurrency industry and led to the collapse of several major crypto companies, including crypto lender Celsius and crypto fund manager Three Arrows Capital.

The turmoil also set off a domino effect that triggered industry-wide bankruptcies and culminated with the collapse of the world's second-largest cryptocurrency exchange, which was part of the cryptocurrency empire of disgraced FTX Sam Bankman-Fried.