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Arrest warrant issued for Do Kwon – the man blamed for 'crypto winter'
Terraform Labs CEO was boss of the TerraUSD and Luna crypto crash. South Korea wants him in cuffs
South Korea has issued an arrest warrant for Do Kwon, the founder and CEO of troubled cryptocurrency company Terraform Labs, which is blamed for a massive crash in cryptocurrency values.
The warrant alleges that Kwon and others violated the nation's capital markets law, according to wire reports.
All six individuals listed on the arrest warrant are located in Singapore, according to South Korean media reports.
Obviously, like in hindsight, a lot of the beliefs I had were wrong
The warrant follows the $40 billion collapse of Terraform Labs' "stablecoin" TerraUSD and the similar Luna tokens, which toppled crypto-dominos and caused the so-called "crypto winter".
Such a crash was not supposed to be possible, given the value of the cryptocurrency was pegged to the US dollar. Terraform Labs promised "the Terra protocol uses the basic market forces of supply and demand to maintain the price of Terra."
But that obviously didn't happen. As the company's scheme unraveled, tales emerged of investors losing huge sums of money.
Other crypto companies, like Singapore-based Vauld, even publicly attributed its fall to the collapse of Terraforms Labs' "UST" stablecoin.
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Although Terraform Labs was co-founded in Kwon's home town of Seoul, South Korea, it is incorporated in Singapore – a fact the small city-state would likely prefer to change.
The Singapore government has regularly warned against investing in cryptocurrencies. In July 2022, the Monetary Authority of Singapore (MAS) managing director Ravi Menon clarified in a speech that "TerraForm Labs and Luna Foundation Guard are not licensed or regulated by MAS, nor have they applied for any licence or sought exemption from holding any licence."
"In reality, these so-called 'Singapore-based' crypto firms have little to do with crypto-related regulation in Singapore," said Menon. In an interview with crypto media outlet Coinage last month, Kwon said [VIDEO] South Korean investigators hadn't been in touch, nor had any charges been filed.
The comments were made about a few weeks after co-founder Daniel Shin's house was raided by South Korean prosecutors, both current and former Terraform employers were banned from international travel, and Kwon was told he must notify authorities of any plans to return to his home country.
Kwon said he planned to cooperate with the authorities, but scoffed at the assertion he sold a product so flimsy he belonged in the same category as former Theranos founder and felon Elizabeth Holmes.
"Obviously, like in hindsight, a lot of the beliefs and sort of the conjectures that I had made were wrong," explained Kwon, who obviously thought his company was worthy of a second chance with a relaunch of Luna.
This week, Terraform Labs announced via LinkedIn it had revamped its website after around four months of inactivity. Doubtless this will be just the fillip needed to please investors who lost money. ®