A South Korean court issued an arrest warrant Wednesday for the founder of the failed Terra cryptocurrency, which collapsed earlier this year, wiping out about $40 billion of investors’ money.
Do Kwon, the 31-year-old South Korean who is the founder of Terraform Labs, is believed to be in Singapore, where he last month gave his first media interview since the collapse admitting that he was “wrong”.
The prosecutors’ office on Wednesday said the Seoul court had issued a warrant for his arrest and was trying to establish his whereabouts.
Arrest warrants were also issued for five other people — who were not named — linked to stablecoin TerraUSD and its sister token Luna.
No further details were provided.
South Korea’s Ministry of Foreign Affairs has not yet responded to a request for comment on Kwon’s extradition chances.
Kwon’s Terra/Luna system disintegrated in May 2022, with the price of both tokens plummeting to near zero, and the fallout hitting the wider crypto market. Its collapse sparked over $500 billion in losses.
Stablecoins are designed to have a relatively stable price and are usually pegged to a real-world commodity or currency.
Unlike other stablecoins backed by tangible assets like cash, TerraUSD was algorithmic — using code to maintain its price at around one US dollar based on a complex system of minting and burning.
Many investors lost their life savings when Luna and Terra entered a “death spiral”, and South Korean authorities have opened multiple criminal probes into the crash.
Experts have compared the Terra/Luna system to a Ponzi scheme and have said the massive May crash was inevitable as Kwon’s cryptocurrency model was fundamentally flawed.
In the interview last month with crypto media start-up Coinage, he admitted he had been “wrong” but said he had not decided whether he would return to South Korea to cooperate with the ongoing probes.
Prosecutors in July raided the home of Terraform Labs’ co-founder Daniel Shin as part of a probe into allegations of illegal activity behind the cryptocurrency’s collapse.
Authorities have also banned key former and current employees from leaving the country.