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

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

On Wednesday, the court also issued arrest warrants for five other individuals linked to Terraform Labs staying in Singapore, according to a spokesperson for the Seoul Southern District Prosecutor’s Office. Daniel Shin, the co-founder of Terraform Labs, was not among the other five.

Prosecutors accused Kwon of financial fraud, arguing that 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 if they had located him.

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

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

The struggling crypto entrepreneur 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 never got in touch with the investigators.”

Shaun Leong, a partner at international law firm Withers, said the Mutual Assistance in Criminal Matters Act allows Singapore authorities to provide assistance at the request of Korean authorities.

If Korean authorities placed Kwon on Interpol’s “red notice”, he would “likely face serious difficulties traveling outside of Singapore as he could be detained at international borders during his travels”, he added.

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

Kwon attended an elite foreign language high 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 stablecoin terraUSD in 2020. The stablecoin had an algorithmic relationship with the cryptocurrency luna which peaked at $116 in early April but crashed to zero in just a few days in May.

The collapse affected hundreds of thousands of investors, many of whom were lured by a program in which clients could lend their land for a 20% return.

The so-called pegging protocol, the mechanism by which the 20% return was offered to investors, is seen as one of the areas of interest for investigation.

The heavy losses suffered by Korean crypto investors have made the brash and divisive Kwon a cursed figure in his native South Korea following media reports of multiple suicides associated with the collapse.

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

“I don’t want to give the impression that my losses are greater in terms of emotional impact compared to people who had less to live for and then put [in their] lifetime savings and then the terra system went down,” Kwon said. “[But] it was basically my life. . . I bet big and I think I lost.

Additional reporting by Mercedes Ruehl in Singapore

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