Do Kwon, founder of Terra wanted in South Korea. Terraform Labs which is owned by Kwon was the company behind the Luna cryptocurrency that crashed back in May. That being said, prosecutors in South Korea issued an arrest warrant for him on Wednesday.
Do Kwon, Founder of Terra Wanted In South Korea
The time the TerraUSD stablecoins went down in May, the action precipitated a $48 billion collapse in the Luna cryptocurrency. And after four months, on Wednesday, authorities in South Korea issued an arrest warrant for Do Kwon who is the founder of Terraform Labs as per South Korean publication Chosun Ilbo. Terraform labs which belonged to Kwon was behind the Terra blockchain, the Luna cryptocurrency, and the TerraUSD (UST) stablecoin.
Kwon Was Born In South Korea But Terraform Labs Is Based In Singapore
Kwon was born in South Korea and remains a citizen of South Korea although Terraform Labs is based in Singapore. He is one of the many employees of Terra for whom an arrest warrant has been issued, as per reports by Chosen Ilbo.
Kwon is a wanted man for going against the capital markets act of South Korea with prosecutors charging that both Luna and UST should have been classified as “investment contract securities.” This mirrors the move by the SEC to designate many other major Cryptocurrencies as securities.
The UST Stablecoin Depegged After $2 Billion Was Taken From the Protocol
Terra was popularly known for its dual Cryptocurrencies Luna and UST. And just like all stablecoins are tied to the US dollar, UST was designed in such a way that it will always be worth $1. The platform, Terra encouraged many people to put their savings in UST, thus offering a 19.5% yield rate.
This means that depositing $10,000 in UST would earn 19.5% interest yearly. However, in May this year, the UST stablecoin depegged after $2 billion was taken from the protocol. And immediately it became clear that the UST will not be able to retain its peg, both it and Luna, the value at which it is tied to the UST crashed.
Luna and UST Had a Combined Market Cap at Just Under $50 Billion
Luna and UST prior to the collapse had a combined market cap at just under $50 billion as per CoinMarketCap data. Three Arrows, a crypto investment firm had at the time, more than $200 million invested in Luna and due to that declared bankruptcy. The inability of the platform to repay creditors made Voyager Digital, a lending platform also declare bankruptcy.
Cofounder of Terra Daniel Shin’s Home Was Raided by Authorities in South Korea In July
When the co-founder of Terra Daniel Shin’s home was raided by authorities in South Korea in July, Bloomberg reported that prosecutors were looking into whether Kwon has evaded taxes simply by moving profits of crypto nature into an offshore account.