Seoul Court Issues Arrest Warrant for Do Kwon and 5 Others
Aaron Limbu Sep 14, 2022 09:45
Do Kwon and five others have allegedly violated the nation's capital markets law and have been issued a warrant from the court in Seoul. LUNA and LUNC both collapsed after the arrest warrant was issued.
Do Kwon, the founder of the bankrupt Terraform Labs crypto ecosystem, has been issued an arrest warrant from a court in South Korea.
Do Kwon and five others have allegedly violated the nation's capital markets law and have been issued a warrant from the court in Seoul, the prosecutor’s office informed Bloomberg.
Kwon and the other five are all located in Singapore, Bloomberg reported citing the prosecutor's office. However, Kwon is yet to reply to an email sent by Bloomberg seeking comment.
Kwon's tokens, including Terra (LUNA) and Terra Classic (LUNC), collapsed massively after the arrest warrant was issued. LUNA was trading as low as $2.4964 at 3:55 PM HKT, down over 35.7%. Its market cap was down to over $347 million from over $555.12 million, while LUNC was trading at $0.0002716, down by over 22.3% during the Asia trading section, according to CoinMarketCap.
Terra Classic is home to the algorithmic stablecoin TerraClassicUSD (UST). It's now-renamed LUNC token collateralized UST, which crashed in a bank run in May.
The fall of the Terra Platform in May led to the historic collapse of the TerraUSD (UST) stablecoins, which has affected the faith of many people in the digital-asset sector. Currently, the crypto sector still remains rattled by the downfall of the stablecoin, and recovery is still under process.
Do Kwon also helped create Luna as part of the Terraform Labs crypto ecosystem, which also lost its value during the fall of the ecosystem.
The ecosystem collapsed when TerraUSD - also known as UST - crumbled from its dollar peg and brought down the ecosystem he had built, after which, the prices of both tokens tumbled to near zero, a shadow of the combined $60 billion they once controlled.
Furthermore, the collapse of Terraform Labs’ associated tokens - LUNA and the UST stablecoin - effectively ushered in the first wave of the crypto winter.
Terra’s unravelling has triggered probes in South Korea and the US, as well as renewed regulatory scrutiny of stablecoins - digital tokens that are pegged to an asset like the dollar.
Currently, the probe into Terraform Labs by South Korean prosecutors is taking a whole new twist as watchdogs are making consultations on how best to classify the collapsed LUNA tokens - now known as Luna Classic (LUNC) - according to a report from Blockchain.News.
As reported by the Korean Herald, the Seoul Southern District Prosecutors Office’s Financial and Securities Crime Joint Investigation Team is consulting with industry stakeholders to determine the best designation for LUNA coins, according to the report.
Following the plummet in prices, companies who had exposure to the assets suffered such financial challenges that many, like Three Arrows Capital (3AC), could not recover from, the report stated.
However, Do Kwon has committed to cooperating with the investigations when the time comes. Bloomberg reported that in an interview with crypto media startup Coinage that floated the prospect of jail time, Kwon said, “Life is long.”
According to a report from a local media platform, the Yonhap news agency, Do Kown was subject to a "Search and Seizure" in July.
The raid was reportedly conducted on the operating office of 15 trading platforms and organisations that have connections to Terraform Labs. While the raid was not projected to last that long, the report had it that prosecutors were very focused on getting as much data as possible to bolster their investigative work on Terraform Labs.
"The amount of data requested by the prosecution was so enormous that it was impossible to complete the search and seizure within one day," one of the exchange’s officials said, "If the data is insufficient while conducting forensics, it seems that it took time because the prosecution requested to extract more data through a data analyst."
While the Korean Herald reported that South Korean prosecutors are broadening their investigations into the company. This move has stirred targeted raids on the home premises of Terraform Labs Co-Founder Daniel Shin as well as those of trading platforms that are suspected to have dealings with the now defunct company.
Image source: CoinAge