October 6, 2022
Interpol issues red notice for Terra founder Do Kwon
Interpol has issued a red notice for Do Kwon, requesting law enforcement agencies worldwide search for and arrest the Terraform Labs founder whose blockchain startup collapsed earlier this year.
The collapse of Terra cryptocurrency (Luna) and the so-called stablecoin TerraUSD (UST) wiped out investors’ $40 billion, prompting an uproar that caused the prosecutors to launch investigations into Kwon and his colleagues. He faces charges in South Korea, the prosecutors said Monday.
The notice against Kwon — which a spokesperson for the South Korean prosecutors confirmed to TechCrunch — however, may set a wrong precedent for the crypto industry and hurt innovation, especially if Kwon didn’t knowingly defraud investors and customers, several industry executives have said in recent weeks.
“Having met Do Kwon … leaving how he is a person aside … I think the criminalization of Terra is a dangerous precedent,” said Haseeb Qureshi, managing partner of crypto investment fund Dragonfly, on a recent podcast. Qureshi, however, cautioned that he, like many others, doesn’t know all the details.
South Korean prosecutors have doubled down on their probe into Kwon in recent weeks, accusing earlier this month that the entrepreneur was “not cooperating,” and was “obviously on the run,” a day after Kwon indicated otherwise. They requested Interpol, the global police organisation, to issue a red notice for Kwon earlier this month.
Kwon, whose whereabouts are currently unknown, said Monday via his Tweet that he is not hiding after South Korean authorities confirmed that Interpol had issued a red notice for his arrest.
Terraform Labs’ so-called stablecoin UST and cryptocurrency Luna dramatically imploded in May after investors lost faith in the efficacy of its fundamentals. Kwon, with approval from the Terraform community, revived the crypto project but has avoided the so-called algorithmic stablecoin component for now. The depegging of TerraUSD (UST), the firm’s previous stablecoin, prompted the crash of Luna token as they were intertwined.
The crash of Luna token also contributed to the wipeout of Three Arrows Capital, once a high-profile crypto hedge fund. The demise of the fund severely impacted a number of crypto lenders, including BlockFi from whom it had borrowed billions of dollars.
South Korea issued an arrest warrant for Kwon earlier this month, a move that saw many investors sell their positions in the revived Luna token. “We are in the process of defending ourselves in multiple jurisdictions — we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months,” Kwon said in a tweet this month.