Do Kwon, the founder of the bankrupt crypto ecosystem Terraform Labs, has been issued an arrest warrant by a court in South Korea.
Do Kwon and five others have been accused of violating the country’s capital market law and have been issued a warrant by a court in Seoul, the prosecutor’s office informed Bloomberg.
Kwon and five others are all in Singapore, Bloomberg reported citing the prosecutor’s office. However, Kwon did not respond to an email sent by Bloomberg seeking comment.
Kwon’s tokens, including Terra (LUNA) and Terra Classic (LUNC), fell sharply after the arrest warrant was issued. LUNA traded as high as $2.4964 at 15.55 HKT, down more than 35.7%. Market capitalization fell to more than $347 million from more than $555.12 million, while LUNC traded at $0.0002716, down more than 22.3% during the Asian trading session, according to CoinMarketCap.
Terra Classic is home to the TerraClassicUSD (UST) algorithmic stablecoin. Now called LUNC token collateralized UST, which collapsed in the bank in May.
At fall of the Terra Platform in May led to the historic collapse of TerraUSD (UST) stablecoins, which has affected the faith of many people in the digital-asset sector. Currently, the crypto sector is still rattled by the collapse of the stablecoin, and the recovery is still in process.
Do Kwon also helped make Luna part of the Terraform Labs crypto ecosystem, which also lost value when the ecosystem collapsed.
The ecosystem collapsed when TerraUSD – also known as UST – fell off its dollar peg and destroyed the ecosystem it had built, after which the price of both tokens plummeted to near zero, a shadow of the combined $60 billion they once controlled.
Furthermore, the collapse of Terraform Labs’ tokens – LUNA and stablecoin UST – effectively triggered the first wave of the crypto future.
Unraveling Terra has sparked investigations in South Korea and the US, as well as new regulatory scrutiny of stablecoins – digital tokens linked to dollar-like assets.
Now, the investigation into Terraform Labs by South Korean prosecutors is taking a new twist as the watchdog is consulting on how best to classify the collapsed LUNA token – now known as Luna Classic (LUNC) – according to a report from Blockchain.News.
As reported by the Korean Herald, the Financial and Securities Crimes Joint Investigation Team of the South Seoul District Prosecutor’s Office consulted with industry stakeholders to determine the best designation for the LUNA coin, according to the report.
After the decline in value, the companies that experienced these assets faced significant financial challenges, such as Three Arrows Capital (3AC), unable to recover, the report said.
However, Do Kwon was committed collaborate with the investigation 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 local media platform, Yonhap news agency, Do Kown was subjected to “Search and Seizure” in July.
The attack reportedly took place at the operating offices of 15 trading platforms and organizations with connections to Terraform Labs. While the raid won’t last long, the report says prosecutors are focused on getting as much data as possible to expand their investigative work at Terraform Labs.
“The amount of data requested by the prosecutor is so large that it is not possible to complete the search and seizure in one day,” said one of the officials of the exchange, “If the data is not enough when conducting forensics, it seems that it will take time. because the prosecutor requests more data through data analyst.”
While the Korean Herald reported that South Korean prosecutors are expanding their investigation into the company. This move led to a targeted attack on the home of Terraform Labs Co-Founder Daniel Shin as well as a trading platform allegedly linked to the now-defunct company.
Image source: CoinAge