Do Kwon, the co-founder of the TerraUSD and Terra Luna cryptocurrencies, has been arrested by a court in South Africa.
Investors were Frightened
Their stunning fall earlier this year frightened investors and caused key token values to plunge. Authorities think Terraform Labs, which is based in Singapore, broke capital market regulations.
Terra Luna lost 99% of its value in May, which was exacerbated by the decline of its sibling coin, TerraUSD. Mr. Kwon did not immediately respond to a request for comment from BBC on Thursday.
The prosecutor’s office of South Korea recently gave an interview to BBC. They revealed they had issued arrest warrants for six people including Do Kwon.
All of these individuals were somehow linked to the case. The spokesperson did not, however, remark on how close officials were to making the arrests.
Mr. Kwon is believed to be in Singapore, which does not have an extradition treaty with South Korea, according to media sources.
In a recent interview with the cryptocurrency show Coinage, Mr. Kwon stated that deciding whether to return to South Korea was “sort of difficult.” However, he asserted that he never spoke with the investigators.
Reports suggest that by the cancellation of his passport and cooperation by Interpol, prosecutors intend to detain and then proceed with the extradition of Kwon from Singapore.
In the mid of May, the value of the Terra Luna Token experienced a downtrend. Its value ended up falling to a low of $0.09 from almost a high of $100.
Its demise was associated with and made worse by a decline in TerraUSD’s value, a so-called “stablecoin.”
Stablecoin companies work hard to stabilize and maintain parity with several assets including the likes of the USD.
However, the value of TerraUSD fell to $0.40.
A sell-off in popular cryptocurrencies like Tether, Ethereum, and Bitcoin was sparked by the Terra network collapse. Resultantly, cryptocrash turned into a famous and very popular phrase in the cryptocurrency industry as well as on the internet.
Gary Gensler, chairman of the Securities and Exchange Commission (SEC) gave a statement.
He said that they allege that Do Kwon and Terraform Labs failed to provide the public with true, fair, and full disclosure.
They further said that they failed to provide the requirements for a number of crypto asset instruments, most notably for Luna and TerraUSD.
They added that they committed fraud by repeated statements that were deceptive and false.
The reason behind the issuance of such statements was to gain the trust of the investors. Once they gain the trust, huge losses were imposed on the investors.
According to the US SEC, Terraform Labs, and Do Kwon, we are able to generate billions of dollars in investments from investors.
They offered them an abundance of instruments belonging to the cryptocurrency industry, with many transactions going unreported.
The SEC also accused Mr. Kwon and Terraform of misleading investors about the stability of TerraUSD. They further said that the accused also made repeated claims about the tokens’ value growth.
But, in May of last year, the value of the token and the associated Luna cryptocurrency plummeted to almost nothing.
According to Elliptic, a major blockchain analytics firm, investors in LUNA and USD lost an estimated $42 billion from all over the world.
Sell-Offs of Major Cryptocurrencies
Major cryptocurrencies including Bitcoin, Ethereum, and Tether all saw a sell-off as a result. The phrase “cryptocrash” became popular online as a result.
At the time, Mr. Kwon remarked that he was heartbroken about the suffering his creation has caused us. The location of Mr. Kwon was not specified in the SEC lawsuit, which also contained additional allegations.
Authorities in South Korea, who have a warrant out for Mr. Kwon’s arrest, stated in December that they thought he was in Serbia.
Mr. Kwon earlier refuted rumors that he was hiding, but he remained silent on his location. He tweeted that for any government agency that has shown interest in communicating with him, he is in full cooperation and has nothing to hide.
In his native country South Korea, Mr. Kwon is accused of fraud and violating the capital markets law.