Last Wednesday the Seoul Southern District Prosecutors Office issued an arrest warrant for Kwon and five other people who worked on both the currencies and Terraform Labs, the company that Kwon co-founded. Prosecutors did not list the charges, but investors have said he defrauded them in promoting the coins. TerraUSD — which used a computer program that claimed to peg its value to the U.S. dollar — and a related token known as Luna both took off in the past year, with each multiplying in value dozens of times over before crashing in May.
A Terra spokesman did not reply to a request for comment. Kwon also did not reply to a request for comment. He said on Twitter Sunday that “We are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months.”
The red-notice request was originally reported by the Financial Times.
The Kwon case is being watched closely as a sign of how aggressively law enforcement will pursue those engaged in allegedly illegal activities in the crypto space. Last month the Treasury Department issued sanctions on Tornado Cash, which helps anonymize crypto transactions, in a strong example of a crackdown on tech-based financial tools.
But the pursuit of individuals in crypto is much rarer, and Kwon’s case could be a bellwether for how other projects that lost large sums of value could be targeted in the courts — and if, eventually, some investors might claw their money back.
The 31-year-old Kwon graduated from Stanford University and briefly worked at Apple before returning to his home country several years ago to found a number of crypto projects, including Luna. Before the spring crash, Kwon was hailed as a visionary and even attracted a cult of everyday fans known as “Lunatics.”
Nor was it just retail traders — Terraform also raised money from respective financiers such as Silicon Valley VC firm Lightspeed Venture Partners.
But in May a quick sell-off began for still-unclear reasons, prompting the loss of more than $40 billion in value, according to analysis firm Elliptic, as the price of Luna plunged…
Read More: Disgraced Luna founder Do Kwon says he’s not on the run. But no one