A South Korean court issued an arrest warrant on Wednesday for the founder of the failed Terra cryptocurrency, which collapsed earlier this year, wiping out about $40 billion in investor funds.
Do Kwon, the 31-year-old South Korean and founder of Terraform Labs, is believed to be in Singapore, where last month he gave his first media interview since the collapse, admitting he had been “wrong”.
On Wednesday, the prosecutor’s office said a Seoul court had issued a warrant for his arrest and was trying to locate him.
Arrest warrants have also been issued for five other people – whose names have not been revealed – linked to the stablecoin TerraUSD and its sister currency, Luna.
and he did not mention any further details.
South Korea’s Ministry of Foreign Affairs has yet to respond to a request for comment on the chances of Kwon’s extradition.
The Terra/Luna system for Kwon disintegrated in May 2022, with the price of both coins dropping to near zero, with repercussions for the broader cryptocurrency market. His collapse caused more than $500 billion in losses.
Stablecoins are designed to have a relatively fixed price and are usually tied to a commodity or real currency.
Unlike other stablecoins backed by tangible assets like cash, TerraUSD was algorithmic – using code to keep its price at around $1 based on a complex mint-and-burn system.
Many investors lost their savings when Luna and Tera got into a “death spiral”, and the South Korean authorities opened several criminal investigations into the accident.
Experts compared the Terra/Luna system to the Ponzi system and said the massive crash in May was inevitable because Kwon’s crypto model was fundamentally flawed.
In an interview last month with crypto media company Coinage, he admitted he had been “wrong” but said he had not decided whether he would return to South Korea to cooperate with the ongoing investigation.
Prosecutors in July raided the home of Terraform Labs co-founder Daniel Sheen as part of an investigation into allegations of illegal activity behind the cryptocurrency crash.
The authorities have also prevented key employees, former and current, from leaving the country.