Make Kitco Your Homepage

South Korean court issues an arrest warrant for Terra founder Do Kwon

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - Prosecutors in South Korea have issued an arrest warrant for Terraform Labs founder Do Kwon, roughly four months after the $45 billion collapse of the decentralized finance platform Terra and its TerraUSD (UST) stablecoin. 

The news was first reported by Chosun Ilbo, a South Korean newspaper, which noted that the warrant was issued by the Seoul Southern District Prosecutors Office's Joint Investigation Team on Financial Securities Crimes and 2nd Division of Financial Investigation.

Along with Kwon, Nicholas Platias, a former head of research at Terra, and a staff member named Han Mo also had arrest warrants issued. Three other employees were mentioned in the report, but they have not yet been identified. All six individuals are being charged with violating the Capital Markets Act. 

According to the report, the warrant will be valid for one year, and South Korean authorities are hoping to work with Interpol to conduct the arrests. The information on the subjects of the warrants will now be sent to Interpol’s Red Notice, which enables their arrest in multiple jurisdictions and could result in extradition.

Interpol’s website states that a Red Notice is “a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action.”

The prosecutors are also mulling over additional steps that they can take, including invalidating Kwon’s passport.

US Treasury says that publishing the Tornado Cash code does not violate sanctions

News of this development isn’t a complete surprise as word began circulating on Monday that South Korean prosecutors were considering classifying Terra’s LUNA token as a security, which would have opened the parties involved up to violations of the country’s Capital Markets Act, which regulates investment products. 

The Seoul-based headquarters of Terraform Labs has been under investigation since the collapse of UST in early May. Terra’s demise saw nearly $45 billion in value wiped from the market caps of UST and LUNA over a period of seven days, triggering a contagion effect that spread across the crypto ecosystem and led to a series of high-profile bankruptcies. 

In mid-August, Kwon gave an interview in which he admitted that he neglected to seriously consider the risks of UST, saying, “In hindsight, I think we should have been more skeptical.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.