A court in Montenegro has sentenced cryptocurrency entrepreneur Do Kwon — who is charged in the US with a multi-billion-dollar fraud — and his ally to four months in prison for using forged passports. 

Kwon is the former chief executive of South Korea-based Terraform Labs, the company behind the stablecoin TerraUSD that collapsed in May 2022.

Local media report Kwon was detained in March alongside Han Chang-joon — who is Terraform Labs' former finance officer — as they tried to board a flight to Dubai in Podgorica, Montenegro. 

The pair were charged with forging official documents and the basic court in Podgorica placed them both in 30-day pre-trial detention.

Police said after arresting them, they had found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers and other devices in their luggage.

The sentence follows a court hearing last week at which Kwon dropped his request for checking the authenticity of the Costa Rican passports after Interpol's confirmation they were fake.

South Korean and US authorities have sought the extradition of Kwon and Han and the handover of the computers.

In late May, the higher court scrapped a bail of 800,000 euros ($1.2 million) for the pair, saying it could not be taken as a solid guarantee, nor their promise they would not run away once released from detention.

The basic court said on Monday that time already spent in detention since the pair's arrest on March 23 would be included in the sentence, state-owned RTCG television reported.

Mr Rodic said he was yet to consult with his clients about further steps and a possible appeal.

TerraUSD was designed as a "stablecoin," a currency that is pegged to stable assets like the US dollar to prevent drastic fluctuations in prices.