Seoul court issues arrest warrant for Do Kwon and 5 others
Do Kwon, the founder of the bankrupt crypto ecosystem Terraform Labs, has had an arrest warrant issued by a court in South Korea.
Do Kwon and five others allegedly violated the country’s capital market law and have been issued an arrest warrant by a court in Seoul, prosecutors told Bloomberg.
Kwon and the five others are all located in Singapore, Bloomberg reported, citing prosecutors. However, Kwon has yet to respond to an email sent by Bloomberg seeking comment.
Kwon’s tokens, including Terra (LUNA) and Terra Classic (LUNC), collapsed massively after the warrant was issued. LUNA was trading as low as $2.4964 at 15:55 HKT, down over 35.7%. Its market cap was down to over $347 million from over $555.12 million, while LUNC traded at $0.0002716, down over 22.3% during the Asia trade section, according to CoinMarketCap.
Terra Classic is the home of the algorithmic stablecoin TerraClassicUSD (UST). It has now been renamed the LUNC token collateralized UST, which crashed in a bank run in May.
The fall of the Terra platform in May led to the historic collapse of TerraUSD (UST) stablecoins, which has affected the faith of many people in the digital asset sector. For now, the crypto sector is still rattled by the fall of the stablecoin and recovery is still in process.
Do Kwon also helped create Luna as part of Terraform Labs’ crypto ecosystem, which also lost its value during the ecosystem’s fall.
The ecosystem collapsed when TerraUSD – also known as UST – crumbled from the dollar peg and brought down the ecosystem he had built, after which the prices of both tokens plummeted to near zero, a shadow of the combined $60 billion they once controlled.
Furthermore, the collapse of Terraform Labs’ associated tokens – LUNA and UST stablecoin – effectively ushered in the first wave of crypto winter.
Terra’s disclosure has sparked probes in South Korea and the US, as well as renewed regulatory scrutiny of stablecoins – digital tokens that are linked to an asset such as the dollar.
Currently, the investigation into Terraform Labs by South Korean prosecutors is taking a whole new twist as watchdogs conduct consultations on how best to classify the collapsed LUNA tokens – now known as Luna Classic (LUNC) – according to a report from Blockchain.News.
As reported by the Korean Herald, the Financial and Securities Crimes Prosecutor’s Office is consulting with industry stakeholders to find the best designation for LUNA coins, according to the report.
Following the price drop, companies with exposure to the assets faced such financial challenges that many, such as Three Arrows Capital (3AC), were unable to recover, the report said.
However, Do Kwon has committed to cooperating with the investigations when the time comes. Bloomberg reported that in an interview with crypto media startup Coinage that raised the prospect of prison, Kwon said, “Life is long.”
According to a report by a local media platform, Yonhap News Agency, Do Kown was subjected to a “Search and Seizure” in July.
The raid was reportedly carried out at the operating offices of 15 trading platforms and organizations that have connections to Terraform Labs. Although the raid was not expected to last that long, the report said prosecutors were very focused on getting as much data as possible to bolster their investigative efforts at Terraform Labs.
“The amount of data requested by the prosecutors was so huge that it was impossible to complete the search and seizure within a day,” said one of the stock exchange officials, “If the data is insufficient while conducting investigation, it seems that it took time. because the prosecution asked to extract more data through a data analyst.”
While the Korean Herald reported that South Korean prosecutors are expanding their investigation into the company. The move has sparked targeted attacks on the homes of Terraform Labs co-founder Daniel Shin, as well as on trading platforms suspected of having links to the now-defunct company.
Image source: CoinAge
