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 markets rules following the $40 billion implosion of the Terra and Luna tokens earlier this year.

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

Prosecutors have accused Kwon of financial fraud, arguing that his stablecoin terraUSD is a type 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 considering "many avenues" to arrest him 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 agreements.

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

The embattled crypto entrepreneur said in an interview last month that he had had no contact with South Korean authorities. The 31-year-old told crypto media start-up Coinage that it was "kind of hard" to decide whether to return to Korea because "we never had any 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 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 terraUSD stablecoin in 2020. The stablecoin had an algorithmic relationship with the Luna cryptocurrency, which peaked at $116 in early April but collapsed to zero within days in May.

The meltdown affected hundreds of thousands of investors, many of whom were attracted by a program that allowed customers to lend out their Terra for a 20 percent return.

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

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

In an interview with Coinage, Kwon said he counted himself among the victims of the crash.

“I don't want to give the impression that my losses are greater in terms of emotional impact than people who had less to do [in their] entire life savings and then the Terra system ran out,” Kwon said. "[But] that was essentially my life. . . I bet a lot and I think I lost."