South Korea issues arrest warrant for fallen ‘crypto king’ Do Kwon

A South Korean court issued an arrest warrant for Do Kwon, the co-founder of collapsed cryptocurrency operator Terraform Labs, for allegedly violating capital market rules following the $40 billion implosion of the terra and luna tokens earlier this year.

The court on Wednesday also issued arrest warrants for five other people linked to Terraform Labs who are staying in Singapore, according to a spokesman for the Seoul South District Prosecutor’s Office. Daniel Shin, the co-founder of Terraform Labs, was not included among the other five people.

Prosecutors have accused Kwon of financial fraud, claiming his terraUSD stablecoin was a kind of investment security under South Korea’s Capital Markets Law. They believe Kwon is in Singapore, but declined to say whether they had found him.

The spokesman said prosecutors were exploring “many ways” to arrest and extradite him from Singapore, including cooperating with Interpol or invalidating his South Korean passport. Singapore is not on South Korea’s list of bilateral extradition treaties.

Terraform Labs and Do Kwon could not immediately be reached for comment.

The controversial crypto-founder said in an interview last month that he had not been in contact with South Korean authorities. The 31-year-old told crypto media startup Coinage that it was “a bit difficult” to decide whether to return to Korea because “we’ve never been in contact with the investigators”.

South Korean prosecutors and police are investigating Kwon and his company after two complaints were filed on behalf of 81 investors over allegations that the business defrauded investors.

Kwon attended an elite foreign language school in Seoul and studied computer science at Stanford University. In 2018, he co-founded Terraform Labs in Singapore with Daniel Shin, the prominent founder of South Korean e-commerce unicorn Ticket Monster.

The pair launched the terraUSD stablecoin in 2020. The stablecoin had an algorithmic relationship with the luna cryptocurrency that peaked at $116 in early April, but collapsed to zero in just a few days in May.

The meltdown affected hundreds of thousands of investors, many of whom were drawn in by a scheme where customers could lend their terra for a 20 percent return.

The so-called “anchor protocol”, the mechanism through which 20 percent returns were offered to investors, is considered to be one of the areas of interest for the investigation.

The heavy losses suffered by Korean crypto investors made the brash and divisive Kwon a villainous figure in his native South Korea following media reports of several suicides linked to the collapse.

In the interview with Coinage, Kwon said he considered himself one of the victims of the crash.

“I don’t want to seem like my losses are greater in terms of emotional impact compared to people who had less to go on and then put [in their] lifetime, and then the terra system went down, Kwon said. “[But] this was really my life. . . I bet big, and I think I lost.”