Crypto Crime: The founder of Luna may be on the run
He founded one of the crypto projects that has experienced one of the most spectacular collapses in recent months.
Do kwon, the co-founder of Terraform Labs, was one of the princes of the crypto industry, but he has now fallen out of favor.
Last May, sister tokens Luna and UST lost all value in a matter of days, wiping out at least $55 billion. Many retail investors lost their last savings, while for institutional investors, including prominent crypto firms, it was the beginning of the end.
In fact, crypto lenders and brokers Celsius Network and Voyager Digital filed for Chapter 11 bankruptcy due to their exposure to hedge fund Three Arrows Capital, which had invested heavily in Luna. Three Arrows Capital was forced into liquidation.
Within days, he had become one of the most hated people in the crypto industry. The authorities in the United States and in South Korea, of which he is a citizen, have launched investigations.
“I’m not on the run”
A few days ago, Seoul issued an arrest warrant for him and five others as part of the South Korean investigation. They are accused of fraud and violation of local market laws. At the time of the ruling, Do Kwon was living in Singapore.
But local police said on September 17 that Kwon was no longer in the country, suggesting he had fled. But Kwon responded, saying he was not on the run and that he was cooperating with South Korean authorities.
“I’m not ‘on the run’ or anything like that,” Kwon wrote on Twitter on September 17. “For any government body that has shown an interest in communicating, we are in full cooperation and have nothing to hide.”
He added that he was preparing his defense to clean up in the coming months.
“We are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months.”
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Despite the serious allegations against him, Kwon also accompanied his tweets with another humorous tweet mocking the fact that he is said to be on the run.
“I haven’t run in a while, gotta cut some calories,” Kwon joked.
The prosecutor disagrees with Kwon
But South Korean authorities dispute his account. Korean prosecutors told Yonhap News Agency that Kwon flew to Singapore “apparently on the run” around the end of April and disbanded the firm’s Korean branch, Terraform Labs Korea, at that time to “evade investigation”.
Kwon is not cooperating with prosecutors’ investigation, and he told prosecutors, through a lawyer, that he did not intend to appear before them, Yonhap reported.
– At the moment, we are in the process of finding the whereabouts of suspect Do Kwon and apprehending him, South Korean authorities said.
According to the Straits Times, Kwon has a Singaporean work permit – Employment Pass, or EP – which expires on 7 December. His request for renewal is under review but is said to be in jeopardy because South Korean authorities have moved to invalidate his passport to force him to return to the country.
Kwon has already been denied an application for a passport that allows foreign entrepreneurs to set up and run a business in Singapore, the Straits Times also reported.
Luna and UST were the first dominoes to crumble in what would later become a liquidity crisis for the crypto sector.
The two tokens crashed after UST lost its link to the dollar, the basis for it qualifying as a stablecoin. Such cryptocurrencies are linked to more stable assets, such as the US dollar or gold. From May 9 to May 13, at least $55 billion of market capitalization disappeared, causing many investors to suffer colossal losses.
UST was an algorithmically stable coin, which was not backed by dollar reserves, but rather by its sister asset Luna. Algorithmic stablecoins are different from centralized alternatives like Tether or USD coins, which are backed by actual dollars or equivalent assets stored in a bank.
Last June, Terraform Labs employees told the US Securities and Exchange Commission that Do Kwon was withdrawing $80 million in the month before the UST and Luna tokens crashed.
