Terra Classic News: Do Kwon, Terra’s CEO, Has an Arrest Warrant Issued by a Korean Court

09/15/2022By: C, Fiona

In order to apprehend Kwon Do-Hyung “Do Kwon,” the former CEO of the defunct Terraform Labs, South Korea has filed a warrant for his arrest.

According to a report by a South Korean news outlet called Navier, a court in Seoul has issued an arrest warrant for Kwon and five other officials, all of whom are thought to be hiding in Singapore. One such person is Nicholas Plates, a co-founder of Terraform Labs, together with another employee named Han Mo. Five prosecutors from three groups, led by the Financial and Securities Crime Unit of the Seoul Southern District Prosecutor’s Office, are credited for submitting the newest warrant.

Six individuals are named in the report and accused of financial fraud in violation of South Korea’s Capital Markets Act. The fall of the Terra ecosystem in May is widely believed to have contributed to the worldwide crypto market crash, which coincides with the issuance of the warrant.

Violation of the Act on the Regulation of Fraud

Capital Markets Act infractions are at the heart of the accusations leveled against them. Prosecutors are reportedly of the opinion that Terra and Luna are “investment contract securities” under the Capital Market Act, as reported on Wednesday.

If money is put into a pot with the expectation of a return and “a payment is received according to the result,” then the Korean government considers the contract to be a security. According to the law enforcement, Kwon did just that using the cryptocurrencies TerraUSD(UST) and Luna, which is a major offense in his own country.

Before the depeg of TerrUSD from the dollar in May, Terra’s LUNA was one of the largest cryptocurrencies by market cap and was promoted as a “hot dot among the cool kids in crypto.” Terra’s contagion spread to stablecoins like USDT and USDC, triggering a full-scale crypto market sell-off and a DeFi crisis for crypto lending institutions like Voyager Digital and Celsius.

Investors in Korea filed a lawsuit against Kwon and his associates for fraud under the Act on the Regulation of Fraud, and authorities in other countries are now looking into the case as well.

Kwon has lately stated that he has not been contacted by South Korean Investigators on the matter, and that he has no plans to return to Seoul. Local media reported in August that he had retained legal counsel in anticipation of potential prosecution in Korea.

Although the arrest warrant is valid for only one year, the prosecution is expected to cooperate with Interpol to have Kwon apprehended by issuing a red notice and having his passport revoked.