The authorities arrested the fugitive Do Kwon at the Montenegrin airport. How easy would it have been to escape from captivity?
Do Kwon, the cryptocurrency fugitive behind the Terra crisis, is facing charges of forging official documents following his arrest by Montenegrin police. On Thursday, police arrested Kwon and another man at Podgorica airport as they attempted to board a flight to Dubai. Police reportedly found forged Costa Rican and Belgian passports in his luggage.
Kwan had been on the run for months, after South Korean authorities issued an arrest warrant for him last September. Montenegrin police confirmed on Friday that the arrested suspect was Quan, as his fingerprints matched information obtained by South Korea’s National Police Agency.
Kwon has been indicted by US District Court in Manhattan on eight counts including securities fraud and conspiracy. The criminal case follows civil charges filed by the Securities and Exchange Commission against Kwon and TerraForm Labs in February. In addition, Kwon is the subject of an Interpol “Red Notice”.
We wonder how easy it will be to escape the long arm of the law as a crypto fugitive, given the current state of laws and regulations. (BeInCrypto does not explicitly condone any illegal activity.)
Kwon sought the right country
Following a tip about Do Kwon’s location, South Korean officials confirmed on 11 December that he was in Serbia. The fugitive reportedly moved there after being transferred to Singapore just before the collapse of Terra. But why would an international fugitive be hiding in Serbia?
Turns out, it was probably a wise move. Serbia and South Korea do not share an extradition treaty, which would have triggered the process of removing Do Kwon to his country. However, the arm of the law is long. South Korean officials said on 7 February that they had sent at least two people to Serbia to find him. Serbian authorities later confirmed that they were working with their South Korean counterparts to locate him.
On February 23, the Securities and Exchange Commission (SEC) in the US charged Do Kwon with defrauding investors. Which, to put it mildly, was incredibly bad news for Kwon. With a long list of extradition treaties, including with Serbia, the United States is one of the most aggressive pursuers of international fugitives.
Therefore, anyone looking to become a crypto fugitive might try to choose a country wisely. Ideally, a country that is not a treaty to consider extradition. Iran, Belarus, Syria and Somalia come to mind.
bad actors exploit vpn
One of the first ways authorities attempt to track down a crypto fugitive is through a digital footprint. The best and easiest way to get around this is with a Virtual Private Network (VPN). VPNs are common tools, although they are more likely to be used to access another country’s Netflix library than to evade the law.
By using a VPN, all of your online activity is routed through an encrypted tunnel, making it difficult to see what websites you visit or what you do online. A VPN can also help conceal your physical location by disguising your IP address. Websites and services will see the IP address of the VPN server you are connected to, not your own. This can be useful for accessing geo-restricted content or staying anonymous online.
However, VPNs are not an easy way to ensure privacy. Ross Ulbricht (also known as “Dread Pirate Roberts”), the founder of the dark web marketplace Silk Road, was a regular user of VPNs. However, in the search for Ulbricht, the police also subpoenaed the VPN provider. The information led authorities to an Internet cafe in San Francisco.
Although VPNs encrypt Internet traffic and hide IP addresses, they can still track user activity within their network, revealing websites visited and browsing duration. VPNs are not completely anonymous as providers can see IP addresses and browsing history. VPNs are also vulnerable to hacking in the event of a compromised encryption protocol.
Use of privacy-enhancing crypto
While on the run, a fugitive would still need money. While crypto has long been associated with criminality, it’s actually not that hard to find if you know how. Public blockchains are, by default, transparent. So, following the crypto breadcrumb trail is far from impossible, as long as you know where and how to look.
This is where privacy-preserving cryptocurrencies come in. There are several cryptocurrencies that prioritize privacy and anonymity, including Monero, Zcash, and Dash. They use various advanced cryptographic techniques, such as zero-knowledge proofs, ring signatures, and secret addresses, to make transactions anonymous and untraceable. However, no cryptocurrency can guarantee complete anonymity.
There are always crypto mixers, who mix crypto assets with other users. This pool of commingled funds then returns an equivalent amount to the respective owners.
Kwon used shell companies
Why not take another leaf out of Do Kwon’s book just to make sure the funds are safe?
Last year, Kwon’s company Terraform Labs allegedly laundered $4.8 million through a South Korean shell company disguised as a blockchain consultancy. Shell companies are entities established for the purpose of holding assets or conducting financial transactions, but do not actually conduct any business.
Shell companies can be used for legitimate reasons, such as minimizing taxes, protecting intellectual property, or facilitating mergers and acquisitions. However, they are often used to hide assets. Shell companies typically employ a process called “layering” to hide funds by transferring funds to multiple accounts and jurisdictions, making it difficult to trace the origin of the funds. They may also appoint “nominee directors” or “nominee shareholders” to act as a front for the true owners, who remain anonymous.
BeInCrypto contacted the SEC for comment on this article. The agency declined to comment but directed us to see its press release regarding Do Kwon’s allegations.
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