South Korea Issues Arrest Warrant for Terra Co-Founder Do Kwon Amid UST Collapse
Following the dramatic downfall of the stablecoin UST, Do Kwon and five associates face arrest warrants in South Korea, sparking major legal actions against Terra's leadership.
According to Bloomberg, Do Kwon, the co-founder of Terra, along with five others, has been issued arrest warrants after the catastrophic failure of the UST stablecoin in May 2022. The Seoul prosecutor's office cited allegations including breaches of South Korea's capital markets regulations. As of now, neither Do Kwon nor the Supreme Prosecutors’ Office has released an official statement. In response to the news, the price of LUNA has plunged 45%, settling at $2.40, while its market capitalization dropped by 42%, now standing at $413.2 million.
Terraform Labs, the company behind Terra (LUNA) and its algorithmic stablecoin TerraUSD (UST), made headlines earlier this year when both cryptocurrencies collapsed, resulting in combined losses nearing $60 billion. The UST crash triggered a widespread downturn in the crypto market, wiping out approximately $2 trillion in value from May to June. In the aftermath, Do Kwon advocated for launching a revamped version of the LUNA token.
The Terra collapse has ignited extensive legal scrutiny of the company and its founders in both South Korea and the United States. This incident has also raised broader concerns about the stability and regulation of stablecoins, which are cryptocurrencies pegged to assets like the US dollar or gold.
This is not the first time Terra and its founders have encountered legal challenges. In June, an anonymous official from South Korea’s Supreme Prosecutors’ Office revealed that several Terraform Labs employees were barred from leaving the country and placed on a no-fly list. Additionally, in July, authorities conducted a raid on the residence of Terraform Labs co-founder Daniel Shin as part of the ongoing investigations.
Currently, all six individuals subject to the latest arrest warrants are believed to be in Singapore.
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