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Interpol Issues Red Notice for Do Kwon, Korea Says

South Korea has asked Interpol to help locate and arrest Terraform Labs co-founder Do Kwon, who faces charges related to the $60 billion wipeout of cryptocurrencies he created.

September 26, 2022
5 minutes
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South Korea has asked Interpol to help locate and arrest Terraform Labs co-founder Do Kwon, who faces charges related to the $60 billion wipeout of cryptocurrencies he created.

Prosecutors in Seoul said Monday that Interpol has issued a Red Notice for Kwon, the latest development in a $2 trillion rout in digital assets that exposed risky practices. Neither Interpol, Kwon nor Terraform Labs immediately replied to emails seeking comment.

South Korean officials have accused Kwon and five others of crimes including breaches of capital-markets law. Kwon moved from South Korea to Singapore earlier this year, but his location became unclear after the city-state said he was no longer there. Prosecutors have stepped up their efforts to find him.

Terraform Labs was the team behind the TerraUSD stablecoin and its sister token Luna. Both coins imploded in May, sparking huge losses in crypto markets that were already reeling from tightening monetary policy.

Digital assets have not yet recovered and regulators around the world are investigating the situation to see how to prevent a repeat. In South Korea, initial enthusiasm for crypto is being replaced by growing disdain.

The collapse of Terra and the broader market rout led to the unraveling of Three Arrows Capital, a once high-flying crypto hedge fund. Contagion also buffeted lenders and brokers such as Voyager Digital Ltd. and Celsius Network Ltd.

TerraUSD, also known as UST, was meant to keep a constant value of $1 in a complex arrangement involving Luna. But the system depended on confidence in the ecosystem created by Kwon, a 31-year-old who studied computer science at Stanford. Once the trust disappeared, the arrangement collapsed.

South Korean prosecutors have issued an arrest warrant for Kwon in part because they believe there is evidence that he may try to flee the country. They also take issue with his claim that he is cooperating with the investigation.

Kwon has previously said on Twitter that the company is committed to defending itself in multiple jurisdictions and that it is determined to uphold a high standard of integrity. He has said that the company is looking forward to clarifying the truth over the next few months.

After the collapse of TerraUSD, the Terra community split into two groups. The first group kept the original tokens and rebranded them as Terra Luna Classic and TerraClassic USD. The second group, led by Kwon, started a new Terra blockchain with a new Luna as its only token.

The new Luna token has seen a 7% decline in value over the last 24 hours, according to data from CoinGecko. Luna Classic has seen an even sharper decline, shedding nearly 13% of its value. TerraUSD has not been able to recover its dollar peg, but still trades on some venues. However, it too has seen a significant decline, with a nearly 10% drop in value.

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