Over four months after the collapse of TerraUSD tore down the crypto marketplace, South Korean police are currently on the hunt for Do Kwon (and other top people behind Terraform Labs) over allegations of fraud and tax evasion.
Bloomberg reported Wednesday that the Seoul Southern District Prosecutors Office has a warrant out for Do Kwon, the CEO of Terraform Labs, as well as five other heads of the company. The Korean Times cited prosecution officials saying that fellow Terraform founding member Nicholas Platias also had a warrant for his arrest.
If you need a quick refresher, back in May the Terra/Luna crypto ecosystem crashed once the UST stablecoin became depegged from the U.S. dollar. The Terra and Luna cryptocurrencies that had a combined market cap of over $60 billion collapsed to near zero. Not even an influx of reserve crypto from the Luna Foundation was able to prop up its crumbling infrastructure.
Korean financial law enforcement was quick to start investigating the TerraUSD collapse and the company behind it. Police instituted a flight ban on employees from leaving South Korea back in June, but many high-level members of the company were already located elsewhere.
Terraform Labs is headquartered in Singapore, where, apparently, all six of the wanted individuals are currently located, according to prosecutors’ text messages cited by Bloomberg. Back in May, Terra execs dissolved their South Korean-based offices before the TerraUSD stablecoin went bust. The company had previously said that moving offices to Singapore had been planned for months.
The question is how easy it will be for South Korean officials to get access to Kwon and his contemporaries. The Monetary Authority of Singapore once tried to market the country as a “responsible global crypto hub.” However, the market downturn and growing international pressure on stablecoins and crypto, in general, led MAS officers to pledge crackdowns on crypto firms.
A spokesperson for Terraform Labs declined to comment on the arrest warrants or on the company’s next moves.
Terraform Labs had been working on a comeback of sorts with its Luna 2.0 project, which completely nixed the entire idea of a stablecoin. The news of these warrants for Kwon and co.’s arrests hasn’t done anything good for the price of Terraform Lab’s new cryptocurrency, which is currently hovering under $3.
In July, Korean prosecutors got a warrant to raid the residence of Terra co-founder Daniel Shin. In a multi-hour long interview with Coinage (which had been criticized for being easy on Kwon and his role in the collapse of Terra) Kwon said Shin had stepped away from the company. Kwon played it cool, saying that prosecutors hadn’t yet charged them with any crime. When asked how he would define fraud, Kwon took a minute to answer before saying “If you know something wasn’t true, and then you argue that was true for personal enrichment or whatever purpose that might be, then that’s fraud… everything that excited us about the Terra stablecoins were true.”