The South Korean police have announced that Do Kwon, the CEO of Terraform Labs and a fugitive cryptocurrency boss responsible for the collapse of the terraUSD and Luna tokens worth $40bn (£32.5bn), has been arrested in Montenegro.

He has been charged with fraud by US prosecutors. Earlier this year, Terraform Labs and Mr Kwon were accused by US regulators of orchestrating a multi-billion dollar crypto asset securities fraud.

The arrest came after South Korean authorities issued an arrest warrant for Mr Kwon last year, as they believed his company had violated capital market rules.

Montenegro, where Mr Kwon was arrested, does not have extradition treaties with the US or South Korea. Mr Kwon has denied being in hiding but never revealed his location.

In February, US financial regulators alleged that Terraform Labs and Mr Kwon misled investors about the stability of TerraUSD and repeatedly claimed that the tokens would increase in value, resulting in a cryptocrash.

“I am heartbroken about the pain my invention has brought on all of you,” Mr Kwon said at the time.

Globally, investors in TerraUSD and Luna lost an estimated $42bn, according to blockchain analytics firm Elliptic.