Retail investors are becoming vigilantes in the hunt for crypto's most wanted man

Kang Hyung-suk's confidence in cryptocurrencies was shaken by the $40 billion collapse of Do Kwon's cryptocurrency operator Terraform Labs, where he used to work in Seoul. Now he is looking for revenge.

In about 10 days, Kang will fly to Dubai, the capital of the crypto-friendly United Arab Emirates, where he believes Kwon is hiding. “Finding him might be easier than we thought,” Kang said.

The 26-year-old software engineer is part of the UST Restitution Group, an association of nearly 4,400 crypto investors that is trying to track down Kwon, who is wanted in South Korea for financial fraud.

“I want to recruit other people to search,” Kang said. “The chance of catching him in Dubai is 50:50.”

The international manhunt for Kwon, a 31-year-old Stanford-educated entrepreneur, is intensifying as retail investors try to recover from devastating losses caused by the collapse of his terraUSD and Luna coins in May.

Investors have filed class-action lawsuits against Kwon in Singapore and the United States, while Interpol has issued a red notice for him. South Korea is expected to revoke its passport on Wednesday.

Kwon claimed in an interview on crypto podcast Unchained this week that the charges against him were not “legitimate” and were “politically motivated.” He said he was complying with South Korean prosecutors' document requests and apologized to victims of the collapse of his blockchain system.

He denied any wrongdoing but declined to reveal his whereabouts, citing security concerns. According to South Korean authorities, his last known location at the end of April was Singapore.

URG members share their insights about Kwon and his company through Discord, a social messaging platform, and scour the internet for clues to his whereabouts. Members have suggested that Kwon could be in Dubai, Russia, Azerbaijan, the Seychelles or Mauritius, among others.

“Dubai is crypto-friendly, very international (he wouldn’t stand out) and has limited extradition treaties in place,” a URG member wrote in a September 28 report. “It appears to be the best choice for the 3-5 hour time zone difference evident in the data.”

URG includes members from all over the world. “His days are numbered,” said a top URG member nicknamed Antithesis, who introduced himself as a 31-year-old Ivy League-educated American. “We have people who are very, very close to Do Kwon.”

He claimed his group was doing "a lot" of work to track down Kwon. "I wouldn't go into details, of course, because publishing our methods would render them ineffective. However, I think we do more than anyone else."

Antithesis, who said he lost a large portion of his life savings worth hundreds of thousands of dollars betting on terraUSD, called the experience "devastating."

"The entire timeline of my life's planning has been turned upside down and set back many years. The additional stress has probably also shortened my lifespan by a few years," he said.

Another URG member, nicknamed HKTrader, who said he worked for a fintech company headquartered in Hong Kong and blew his savings on a house on terraUSD, spent a month organizing a class-action lawsuit in Singapore against Kwon and discovered his whereabouts in the country by hiring a private investigator.

"We tracked [him] down pretty well when he was in Singapore," he said, adding that his group lost track of Kwon after he left the city-state.

He is skeptical that Interpol can locate Kwon. "You know how Interpol works. It is up to the host country to act," he said.

But even if Kwon were arrested and extradited to South Korea, experts say it would not be easy to convict and punish him for financial fraud or violating capital market rules because of uncertainty over whether crypto is subject to securities law.

“I wonder how effective the legal action against him might be, given the lack of a legal basis to punish crypto players,” said Choi Hwa-in, a crypto expert in Seoul.

“This would only put further strain on the crypto market, dragging down its value and thereby hurting investors even more.”

This month, a South Korean court rejected prosecutors' request to issue an arrest warrant for Kwon's close associate, who ran Terraform Labs' operations, questioning whether terraUSD and luna qualified as investment securities under the country's capital markets law.

Terraform Labs said the company would continue to communicate with authorities, but accused South Korean prosecutors of speaking to the press.

“Recent developments reaffirm that Terraform Labs and its stakeholders continue to face a highly politicized and unpredictable legal environment in South Korea,” the company said.

“The facts are on our side and we look forward to the truth coming to light in the coming months.”