South Korea has issued an arrest warrant against Do Kwon, the founder of Terraform Labs. In addition to Kwon, five other people linked to the company had their names included in the mandate.
According to the Bloomberg Kwon is accused of involvement in the collapse of the stablecoin USTC (formerly (UST), which resulted in the collapse of the Earth as a whole. As a result, investors lost US$40 billion.
More trouble for Do Kwon?
The article reports that a court in Seoul, the South Korean capital, has issued an order against Kwon. According to the order, the Terra boss allegedly violated the country’s securities laws. These violations took place before May 2022 and culminated in the Earth’s collapse, the indictment says.
However, the order also includes the names of five other people involved in Kwon’s same crimes. The founder of Terra began to hire lawyers from a South Korean firm, in order to protect himself against the accusations.
In this sense, Kwon sought to guard against the legal problems that arose during the investigation launched by the government. Now, however, the executive faces the possibility of being arrested.
As per reports, South Korean prosecutors carried out searches of more than 15 cryptocurrency companies. At the same time, raids and seizures also took place in the offices of Terra executives and affiliates.
However, the arrest warrant does not appear to have arrived in time, as Kwon and the other accused individuals are said to be living in Singapore. Terra’s founder has given interviews about the network’s collapse in the past, but this time he did not comment on the arrest warrant or the charges.
In August, as Cryptheory reported, Kwon gave his first interview since the end of the Earth ecosystem. At the time, the executive said that Korean regulators had not filed any formal charges against him.
Tokens face new investigation
According to reports, South Korean prosecutors have also started a new investigation into Terra ecosystem tokens. A review has started on the three tokens, LUNA, Luna Classic LUNC and UST (now USTC).
The investigation seeks to find out whether the tokens would fit into the securities category and therefore should be regulated. If the court rules this way, Terra and Kwon could face prosecution for issuing securities irregularly.
As a result, the three tokens have fallen sharply over the past 24 hours. The LUNA drops 32.74%, while the LUNC loses 16.21%. USTC is now down 18.55%.
Earth’s collapse took the market by surprise. Overnight, one of the largest cryptocurrencies in the world and the third largest stablecoin on the planet lost billions of dollars in value.
In the course of a few days, UST and the then-token LUNA simply turned to dust. Then the network underwent a split that spawned a new Terra network, which held the LUNA token. The old network, in turn, was renamed Terra Classic, with the Luna Classic (LUNC) token and the USTC stablecoin.