The co-founder of cryptocurrency Terra, Do Kwon, is allegedly on the run following the collapse of Terraform Labs earlier this year which wiped out about $40bn of investors’ money.
TerraUSD, or UST, is what’s known as an algorithmic stablecoin.
It relied on code and a sister token, luna, to maintain a $1 value. But as digital currency prices fell, investors fled the stablecoin, sending UST tumbling — and taking luna down with it.
A South Korean court on Wednesday issued an arrest warrant for Kwon following the collapse and his lack of cooperation.
The Seoul Southern District Prosecutor’s Office previously issued an alert saying that Do Kwon left for Singapore towards the end of April after the Terra Luna debacle.
His family also left the country shortly after and the majority of the company’s former executives also left for Singapore.
The Terra Luna cryptocurrency plunged in May following the de-pegging of the TerraUSD stablecoin, with around $40 billion worth of funds lost following the collapse.
Following the alert, Kwon, 31, released a statement on Twitter denying that he’s trying to flee the country but denied saying where he was.
“I am ‘not on the run’ or anything similar,” he said.
“For any agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide. We are in the process of defending ourselves in multiple jurisdictions… and look forward to clarifying the truth over the next few months.”
The prosecutor’s office said that Kwon told investigators through his lawyer that he did not want to respond to their summons immediately.
Terraform Labs is a company incorporated in Singapore, but registered to do business in South Korea as Terraform Labs Korea, with headquarters in Busan and branches in Seongdong District in eastern Seoul.
Kwon founded Terraform Labs Korea on June 21, 2019. On September 26, 2019, Ticket Monster (Tmon) founder Shin Hyun-sung joined the company as a second co-founder. However, he resigned on March 2, 2020, leaving Kwon to serve as CEO of Terraform Labs.
Blockchain data analytics firm Elliptic gets a hit when UST and LUNA crash. Elliptic revealed that Luna Foundation Guard (LFG) had sent its Bitcoins, which were used as reserves for UST, leading crypto exchanges Binance and Gemini.