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In May, what the Terra community first suspected to be a FUD attack became one of the most devastating market crashes in crypto history, triggering the loss of millions of assets from investors of TerraUSD (UST) — now renamed TerraUSD Classic (USTC) — and Terra (LUNA), which is also rebranded to Luna Classic (LUNC). The UST stablecoin started to drift away from its United States dollar peg, dropping to an all-time low of $0.006 in June. Apart from UST, LUNA, an asset that once reached its peak at $119.18 in April, dropped massively to an all-time low of $0.0000009, causing suicide hotlines to be pinned on the project’s Reddit community. The Terra crash also affected various decentralized finance (DeFi) protocols, leading to an 80% and above decline for projects that were associated with the stablecoin.
[Reguerra, E. South Korea issues arrest warrant for Terra Founder Do Kwon. (Accessed September 14, 2022)].
“A court in South Korea issued an arrest warrant for Do Kwon, the founder of the Terraform Labs cryptocurrency ecosystem, whose implosion earlier this year sparked a global crypto rout. The court in Seoul issued a warrant for Do Kwon and five others on allegations that include violations of the nation’s capital markets law, according to a text message from the prosecutor’s office” [Kim, H. Terra Co-Founder Do Kwon Faces Arrest Warrant in South Korea. (Accessed September 14, 2022)].
Local outlet Chosun reported on Wednesday that a team from the Seoul Southern District Prosecutor’s Office also issued arrest warrants for other employees, including Nicholas Platias, a former head of research at Terra, and staff member Han Mo. All three are believed to be currently residing in Singapore. Caetano Manfrini, an attorney for Brazil-based GEMMA Ecosystem, tweeted that arrest warrants were issued for a total of five affiliates, including Kwon. Their information will be sent to Interpol’s Red Notice, which enables their arrest in multiple jurisdictions and could result in extradition, he added. The warrants are valid for one year.
[Nagarajan, S. South Korea Issues Arrest Warrant for Terra CEO Do Kwon: Report. (Accessed September 14, 2022).
“The charges levied against them are reportedly tied to violations of capital market laws. On Monday, word broke that South Korean prosecutors were considering classifying Terra’s luna token as a security, which would open Kwon and other Terraform Labs developers up to violations of the country’s Capital Markets Act, formerly the Securities and Exchange Act, which regulates investment products” [Id].
"The crypto community has welcomed news of the arrest warrant, expressing much happiness about the development. Conor Brandson said: ‘I don’t think it’s a surprise that he’s being officially accused of a crime. It’s a surprise an arrest warrant didn’t happen sooner’ [Adejumo, O. LUNA sinks 20% after South Korea issues arrest warrant for Do Kwon. (Accessed September 14, 2022)].
@FatMan Terra tweeted the following:
And @Crypto_McKenna likewise tweeted:
“In the aftermath of the stablecoin’s toppling, prosecutors blocked Terraform employees from leaving South Korea during investigations. At the time, Do Kwon had already left the country and reports claimed his passport could be invalidated” [Nagarajan, supra].
Kwon has previously “acknowledged that he had to take the ultimate responsibility for any such vulnerabilities” within the then Terra ecosystem. [Smith, G. South Korea Issues Arrest Warrant for Terra/Luna Founder Do Kwon - Report. (Accessed September 14, 2022)]. “Kwon has said he plans to cooperate when the time comes. In an interview with crypto media startup Coinage that floated the prospect of jail time, Kwon said, 'Life is long” [Kim, supra].
