Interpol issues warrant for Terra cryptocurrency founder

Interpol has issued a warrant for Do Kwon, the co-founder of cryptocurrency start-up Terraform Labs. This happened at the request of the South Korean authorities. Do Kwon is wanted for involvement in the crash of stablecoins Terra and Luna.

Do Kwon, along with five others, allegedly committed violations of capital market legislation, writes Bloomberg news agency. It is unclear what exactly these infringements consist of. Do Kwon previously moved from South Korea to Singapore, where Terraform Labs is based, but he is currently untraceable. The South Korean Public Prosecution Service has issued a search warrant for Do Kwon, partly because there would be ‘indirect evidence of escape’. Nor would he cooperate, despite his own claim about that. With the search warrant, the authorities are calling on other police and investigative services to arrest Do Kwon.

Terraform Labs is the company behind stablecoins TerraUSD and Luna. Terra, in conjunction with Luna, was intended to maintain a constant value of one dollar. If the price of the Terra dropped, Luna could be bought to boost it again. The condition for this was that the value of Luna had to remain high enough to be able to absorb value fluctuations of Terra. The value of Luna has decreased to such an extent that a further decrease in Terra could no longer be absorbed.

For a situation like this, the company had more than 80,000 bitcoin in reserve. Do Kwon promised to invest all these bitcoins in an effort to increase the value of the Terra. He kept that promisebut the desired effect was not achieved.

Both digital currencies depreciated significantly in May. They took a large part of the cryptocurrency market with them. At the time, it was also troubled by tightening monetary policy. The market value of all cryptocurrencies combined has dropped from $3 trillion to $1 trillion since the crash. Crypto hedge fund Three Arrows Capital and lenders and traders such as Voyager Digital and Celsius Network did not recover. After the collapse, the original tokens were rebranded as Terra Luna Classic and TerraClassicUSD. Do Kwon went ahead with a new Terra blockchain with Luna as the sole token.

Update: the article initially stated that Interpol had issued an arrest warrant. That had to be a search warrant; Do Kwon has not yet been convicted, only suspected.