South Korean court issues arrest warrant against Terra co-founder Do Kwon
According to reports, the court has issued arrest warrants against five others along with Do Kwon, charging them with violating South Korea Capital Markets Act.
A South Korean court in Seoul issued an arrest warrant on Wednesday against Do Kwon, Co-founder of . This comes four months after the collapse of the Terra ecosystem, its native Luna token, and its TerraUSD algorithmic stablecoin, which caused a trillion-dollar crypto wipeout.
According to Bloomberg, the court has issued arrest warrants against five others along with Do Kwon, charging them with violating the country's Capital Markets Act. The reports also suggest that all six individuals are located in Singapore.
Earlier, in July, the court opened an ongoing investigation into the Terra/Luna collapse, with the investigation led by a special financial crimes unit.
As reported by TechCrunch, Kwon said in an interview last month that South Korean prosecutors hadn’t been in contact with him and he hadn’t been charged with anything—even though law enforcement was barring his employees from leaving the country.
Luna-UST crisis
In May, Luna and stablecoin TerraUSD suffered a spectacular collapse. Terra Luna’s merciless crash sent shockwaves to the entire crypto industry. The crash shook the faith of many investors as they believed that stablecoin would be a safe haven.
In May, more than 2,000 investors filed a class-action lawsuit against Do Kwon. The US Securities and Exchange Commission also opened an investigation into possible money laundering.
Terraform Labs had raised more than $200 million from investment firms such as Lightspeed Venture Partners and Galaxy Digital to fund crypto projects built with the currency.
Aftermath of collapse
The collapse also led to several countries looking at stablecoin regulations, with the crypto industry seeing several bankruptcies, including crypto hedge fund Three Arrows Capital. Many crypto lending platforms, including Celsius Network and Voyager, halted withdrawals.
In May, US Treasury Secretary Janet Yellen stated that the de-pegging of TerraUSD showed the urgency to have a regulatory framework on stablecoins, which would minimise the volatile price swings.
The crash also hurt market sentiments, with global crypto firms—Coinbase, Gemini, Robinhood, BlockFi, BitMex, and Crypto.com—downsizing their workforce.
Edited by Kanishk Singh