The co-founder of the stablecoin TerraUSD, Do Kwon, is officially a wanted man in his native South Korea. Last week, a court there issued an arrest warrant for him, and prosecutors say he’s wanted for violations of capital markets law.
Kwon’s company, Terraform Labs, is behind the algorithmic stablecoin as well as its sister cryptocurrency, Luna. TerraUSD’s failure set a chain of events into motion that spurred the big crypto crash this summer.
Kwon is reportedly nowhere to be found. The 31-year-old flew to Singapore, which does not have an extradition treaty with South Korea, around the same time that he dissolved Terraform Labs’ offices in Korea in late April, with his family and other personnel following him there in May, but police in Singapore recently told Reuters he was no longer there. He did recently tweet, however, that he was not trying to evade arrest – although he failed to disclose his location.
He tweeted: “I am not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide.”
“We are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months,” he added.
However, prosecutors dispute these claims and insist he is “obviously on the run.” Prosecutors say he closed down his company’s South Korean branch in order to “evade investigation.”
A spokesperson for the prosecutor’s office in Seoul said they are trying to locate him so he can be arrested, adding: "He is clearly on the run as his company’s key finance people also left for the same country during that time."
South Korea has also asked Interpol to issue a “red notice” alerting law enforcement agencies around the world to the warrant for Do Kwon. The notice is used to ask authorities to locate and arrest someone who is the subject of legal action and is typically issued for fugitives who are wanted for prosecution or serving a sentence.
The “hacktivist” group Anonymous is also looking for Kwon, pledging in a video that they will ensure he is “brought to justice as soon as possible.”
Binance users warned about Terra 2.0
Do Kwon is also the subject of a warning the world’s biggest crypto exchange, Binance, is showing users. When Do Kwon’s first stablecoin collapsed, he tried to save face by relaunching it under a new token called Terra 2.0, which is still listed on the major crypto exchanges.
Although Binance has stopped short of delisting it, they are prompting users who attempt to buy it with a warning stating: "Please Note: A South Korean court has issued an arrest warrant against the cofounder of Terra 2.0 (LUNA). Please understand the risks involved and trade with caution. Binance will not be held responsible for any trading losses." Users must then click on a button that says “I understand” before proceeding.
Kwon and other personnel from Terraform Labs are being investigated for tax evasion and financial fraud that saw $40 billion worth of investors’ funds wiped out. Some investors who saw their life savings go up in smoke have filed complaints accusing Kwon of operating a Ponzi scheme.
Hundreds of thousands of people lost money investing in TerraUSD and Luna, and some say Kwon's online personality played a big role in building up hype for his failed cryptocurrencies.
Cryptocurrency expert Brad Nickel noted: “It's a cult mentality with a leader who has a larger-than-life personality and at the same time he has a confidence that is very seductive." Some of his more ardent admirers referred to themselves as the “lunatics.”
The effects of Luna’s collapse were so far-reaching that online searches for the Mapo Bridge, a popular place in Seoul for committing suicide, skyrocketed in its aftermath, prompting police to increase patrols in the area.
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