Montenegrin prosecutors have appealed a court decision to grant bail to Do Kwon, cryptocurrency firm Terraform Labs' co-founder accused of fraud in South Korea and the United States in connection with the crash of the firm's TerraUSD and Luna coins.

A district prosecutors office in Podgorica, Montenegro, recently filed the appeal against the court decision to grant bail to Kwon and an aide of Kwon, known only by his family name Han, according to a report by Vijesti, a Montenegrin newspaper.

The two, who had been on the run, were arrested at Podgorica Airport in late March while trying to leave the country with forged passports.

Kwon, 32, fled South Korea while being investigated in connection with the crash of Terraform Labs' TerraUSD and Luna coins in May last year, which wiped out nearly 50 trillion won ($37.5 billion) in market value.

Last week, Kwon and Han applied for bail and offered to each pay 400,000 euros ($436,000) in bail money, and the Basic Court in Podgorica decided to grant bail to both of them.

They will remain in detention until the court delivers its decision on the prosecution appeal.

If the court rejects the appeal and the bail is paid, they will be released from detention but have to remain inside a designated place. They will reportedly stay in an apartment belonging to the company of the female partner of Kwon's local lawyer once they are released.

The South Korean prosecution has sought the extradition of Kwon. Interpol has also issued a red notice, which is used for the highest level of wanted suspects and criminals. Kwon is also facing criminal charges in the United States.

TerraUSD was designed as a stablecoin, which was pegged to stable assets, such as the US dollar. But holders of TerraUSD and Luna lost more than an estimated $40 billion in market value after the stablecoin plunged far below its $1 peg last May. (Yonhap)