South Korean court issues arrest warrant for Do Kwon
South Korean court issues arrest warrant for Do Kwon
Crypto

South Korean court issues arrest warrant for Do Kwon

By Eliano Martellucci - 14 Sep 2022

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In South Korea, the court has just issued a warrant for the arrest of Do Kwon

South Korea proceeds to arrest Do Kwon

Do Kwon is the founder of the Terra-Luna project, which completely failed a few months ago. 

The story of this ecosystem represents one of the most sensational scandals in the history of the crypto world. 

Arguably, LUNA, the UST algorithmic stablecoin and the DeFi Anchor Protocol were all part of an immense billion-dollar Ponzi scheme

Before the crash, Luna was part of the top 10 most capitalized cryptocurrencies, boasting a total market cap at the time of its $116 ATH of $41 billion

lunc usd chart
LUNC / USD chart

When its crash began, due to too many coins being issued in the market, the UST stablecoin, the second key pillar of the Terra project, permanently lost its peg from the dollar, slipping below $0.01

ustc usd chart
USTC / USD chart

This set off a snowball effect, which spilled over into the largest DeFi protocol in the Terra ecosystem. In a short time, Anchor’s TVL went from $17 billion to about $2 million today

anchor tvl
TVL di Anchor Protocol

The result was a complete implosion of the Terra-Luna project

What happened after Terra’s failure?

It is enough to simply try to think of the chaos that an event of this magnitude generated in the market. There was a total loss of confidence, not only in Terra itself, but in the entire crypto market, even if only briefly. 

In short, a dream for regulators and haters in the entire industry, who took advantage of it to sling further mud on the affair. 

Do Kwon tried to get back on his feet really quickly. First with recovery plans, and then by finally abandoning ship to start what would be the Terra 2.0 project. 

Unfortunately for him, the pitfalls did not end there. Soon after, local authorities began investigating Terraform Labs, the company that created Terra. According to reports in the Korean newspaper, KBS Online, Terraform Labs is allegedly accused of money laundering as much as $4.8 million.

In addition, South Korean police have also joined the investigation, launching a large-scale inspection into what happened. 

According to a report revealed by JTBC, a local television network, one of the employees interviewed reportedly said that speculation was already circulating within the team that there might be an impending collapse, but Do Kwon preferred to move forward.

To top it off, Do Kwon also received a threat from the well-known hacker group Anonymous, made public through a YouTube video:

At this time, there are still the old LUNA and UST on the market, which have changed their names to Luna Classic (LUNC) and TerraClassicUSD (USTC), respectively. 

With the launch of the new project, however, the idea of the algorithmic stablecoin has been dropped, while the main crypto takes the official name of LUNA. Pretty much the same as the previous one. 

Do Kwon faces arrest

Four months after Terra’s collapse, which has been packed with analysis, research and investigation, a South Korean court has decided to have Do Kwon arrested

He is the first to be held directly accountable, as founder and CEO of Terraform Labs. As expected, however, he was not the only one. His warrant was also joined by two other employees who were fully involved. 

The first to report the news was Chosun Ilbo, a South Korean newspaper. 

According to what was published, the three are believed to currently reside in Singapore. In addition to Do Kwon, Nicholas Platias, co-founder of Terraform Labs, and Han Mo, another employee, are implicated. 

All three are accused of violating the Capital Markets Act. 

The arrest warrant was issued by the Seoul Southern District Prosecutors’ Office’s Joint Investigation Team on Financial Securities Crimes, which works on financial crimes.

This was joined by the 2nd Division of Financial Investigation.

What is interesting is that this type of warrant is valid for one year. Therefore, authorities are working hard with Interpol in order to make the arrests. 

Do Kwon, Platias and Mo will certainly not give investigators an easy time. Exploiting their resources accumulated over the years to the detriment of poor investors, they are now who knows where. 

Will they take a hard look at themselves and bring themselves to justice, or is this just the beginning of the race between guards and thieves?

For now, the only ones who have paid the price are the people who believed in an unhealthy project with concealed decay. A project that, to those who perhaps believed in it too much, cost them their life savings.

Eliano Martellucci

Eliano has a bachelor's degree in Economics and Business Administration and is about to complete his master's studies in Finance at the University of Trento (UNITN). He got hooked on the crypto and blockchain world during the summer of 2017 and has not left it since then. He currently works as editor & SEO specialist at Cryptonomist, writes articles and invests, both in Blue Chip and early stage assets. Furthermore, he is working on his latest thesis project entitled: "A Study on crypto market Sentiment Analysis through Machine Learning algorithms in python."

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