South Korean officials are reportedly taking steps to revoke Terraform Labs founder Do Kwon’s passport less than 24 hours after courts issued a warrant for his arrest for allegedly violating the country’s capital-markets law. Kwon’s company developed the Luna and TerraUSD so-called “stable coins” which collapsed in May, ultimately tanking the price of Bitcoin and helping usher one of the worst crypto winters in the industry’s history.
Prosecutors pursuing Kwon, Bloomberg reports, sent a request to South Korea’s Foreign Ministry to revoke his passport this week. If granted, Kwon, who’s reportedly hiding out somewhere in Singapore, would have to return to his home country within 14 days. The ministry did not immediately respond to Gizmodo’s request for comment but told Bloomberg it, “is taking necessary steps in accordance with relevant laws and regulations.”
Seoul’s Southern District Prosecutors Office issued the warrant for Kwon’s arrest, as well as a warrant for five others involved in Terralabs, on Wednesday, around four months after the TerraUSD disaster. Investigators issued flight bans on Terralabs officials back in June, but some, including Kwon, were already out of the country at the time.
Terralabs did not immediately respond to Gizmodo’s request for comment.
The Terra and Luna cryptocurrencies, once valued at over $US60 ($83) billion, plummeted to near worthlessness in May after the UST stablecoin became depegged from the dollar. Making matters worse, Korean Supreme Court documents revealed Kwon and other executives suspiciously moved to shutter their Korean headquarters a mere week before the collapse. Speaking with Gizmodo at the time, a Terralabs spokesperson said the headquarters closing, while seemingly sudden, was actually four months in the making. Kwon himself acknowledged the suspect of the Korean office closing in a May Tweet, writing, “shutting down a company just takes some time, and timing is purely coincidental.”
I’ve been in Singapore since last December – this is a personal decision and has long been planned. I’ve been open about being located in Singapore across multiple interviews and podcasts
Shutting down a company just takes some time, and timing is purely coincidental
— Do Kwon 🌕 (@stablekwon) May 21, 2022
In addition to the investigations, former investors have filed multiple lawsuits against Kwon and other VC firms that made up the Luna Foundation Guard, accusing them of misleading investors and violating federal securities laws, according to CoinDesk. One of the plaintiffs in a lawsuit filed in the Northern District of California said Kwon’s so-called “Terra Tokens” resembled securities, thanks in no small part to Kwon’s marketing efforts.
Kwon, once a billionaire based on the holdings of his coins, told The Wall Street Journal earlier this year that he lost almost all of his net worth during the downturn. More importantly, the collapse also reportedly wiped clean the savings of thousands of investors around the world.
“I’ve been devastated by recent events and hope that all the families who’ve been impacted are taking care of themselves and those that they love,” Kwon told The Journal.