As per emerging reports, a South Korean Court has issued a warrant of arrest against the renowned founder of Terra, Do Kwon and five others. As reported, Do Kwon and the five persons who are currently in Singapore will face trials on allegations involving gross violation of the country’s capital markets law.
Notably, the arrest warrant comes a few months after Terra Lab employees became prohibited from leaving South Korea. Recall that the employees of Do Kwon became barred from leaving South Korea in June during the authorities’ investigation into the impulsion of Terra project. Also, during the investigation in July, authorities raided local cryptocurrency exchanges.
The crash of Terra ecosystem
Recall that the Terra ecosystem endured a crash last May. The collapse, as believed manifested as one of the worst market crashes in crypto history. The attack led to the loss of millions of assets by Terra USD(UST) investors. The UST stablecoin dipped from its dollar peg to %0.006 in June. However, after the attack, Do Kwon renamed the Terra USD to Terra Classic USD(USTC) while Terra(Luna) became rebranded to Terra Luna Classic(LUNC).
Apart from UST, LUNA, an asset which reached its all-time high in April, plunged from $119.18 to $0.0000009. The crash resulted in suicide hotlines being pinned on the Project Reddit community. Also, the Terra collapse affected various decentralized finance(DeFi) protocols. The crash led to an 80% in projects related to the stablecoin.
Genesis of the probe of Do Kwon and several others
After the crash, investigators began to probe Do Kwon and several others over the circumstances that warranted the collapse. In July, South Korean investigators invaded the home of Daniel Shim, Terraform Labs co-founder. The raid, as reported, manifested as part of the probe into the report indicating several circumstances behind the project’s collapse.
Also, South Korean authorities instructed Do Kwon to notify them as soon as he returned to the country. The U.S District Court in Northern California also bought a class-action lawsuit against Do Kwon and Terraform.However, despite the series of investigations on the collapse, Do Kwon denied the allegation that Terra’s project was a fraud. According to Do Kwon, almost all his net worth had gone down with Terra’s crash.
In addition, Do Kwon hired attorneys from a law firm in South Korea on August 17. He hired the attorneys a few days after saying the authorities had not reached out to him. Do Kwon reportedly submitted an appointment letter to the department liable for investigating Terra’s collapse.