Legal troubles for Terraform Labs co-founder and CEO Do Kwon have reached new heights as a court in South Korea issues an arrest warrant against him.
Manhunt For Do Kwon Commences
More trouble is brewing for Terra’s notorious figurehead Do Kwon. Months after the project’s spectacular collapse, authorities are still after Kwon.
According to a Wednesday Bloomberg report, a Seoul-based court has issued a warrant of arrest for Kwon and five more individuals currently living in Singapore. They are reportedly charged with violation of the country’s Capital Markets Act.
Kwon gained popularity within the crypto industry in late 2021 and early 2022 as Terra treaded upwards despite a muted performance in the wider market. Terra gained more momentum after Kwon and the Luna Foundation Guard (LFG) launched a plan to accumulate billions of dollars worth of Bitcoin to act as an emergency reserve fund for TerraUSD. He, unfortunately, suffered a tremendous fall from grace when the network’s algorithmic stablecoin UST lost its parity to the US dollar in May.
The event sparked a death spiral that saw Terra’s LUNA token crash to virtually zero, wiping out $45 billion in investors’ investments and savings. Major crypto institutions that bet big on Terra, including Celsius Network, Three Arrows Capital, and Voyager Digital also lost, resulting in insolvency issues as the prices of cryptocurrencies shrank by upwards of 50% from their all-time highs.
In the wake of the collapse, in late May the Terra community backed the rollout of Terra 2.0, a project that entailed creating a new LUNA token without the algorithmic stablecoin.
The Legal And Regulatory Hydra Facing Terra
Terraform Labs and Do Kwon have endured an incredibly rough year so far.
The blow-up of the Terra ecosystem triggered commentary from regulators across the globe, as government leaders highlighted stablecoins as risky assets.
Kwon was slapped with a class-action suit in June filed in the U.S District Court in Northern California. In July, South Korean prosecutors raided the Seoul home of Terraform Labs co-founder Daniel Shin as part of a probe into allegations of intentionally causing the collapse of UST. Terraform Labs employees are also prohibited from exiting South Korea as prosecutors continue with their inquiries.
Despite the intensified investigations, Kwon has maintained that the Terra project was not a fraud while also claiming he personally lost nearly all his wealth in the UST-LUNA meltdown.
In his first public long-form interview last month, Kwon said he had never been in contact with Korean authorities and they had not charged him with anything. Although he claimed to be cooperating with authorities, Kwon noted that he has no plans of returning to South Korea in the near future.
As we previously reported, Kwon hired a new team of lawyers in South Korea in preparation for a legal war.