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Interpol Issues Red Notice for Crypto Founder Do Kwon

Enlarge / Terra, the “algorithmic stablecoin” designed to stay close to the value of the US dollar, crashed in May 2022, triggering a cryptocurrency selloff.

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Do Kwon, the cryptocurrency founder whose Luna coins and TerraUSD “stablecoin” ushered in a $300 billion crypto crash, is now wanted by Interpol following arrest warrants issued earlier this month.

South Korean authorities issued arrest warrants last week for Kwon and five others on September 14, claiming that his work on Terraform Labs’ crypto products violated the country’s trade laws. All six were believed to be located in Singapore at the time. The Singapore police believe that Kwon is no longer there. according to press reports. Interpol issued a “red notice” recently, asking law enforcement agencies around the world to locate and detain Kwon.

kwon tweeted three days after South Korea’s arrest warrant that he was “not ‘at large’ or anything like that” and that he was “in full cooperation and we have nothing to hide”. But he hasn’t tweeted publicly in over a week since then.

South Korean prosecutors said the next day that Kwon was “obviously at large” and was not cooperating with the investigation. Prosecution sources told South Korea’s Yonhap News Agency that Kwon’s lawyer told prosecutors that Do Kwon would not appear for questioning. Kwon and Terraform Labs are also being investigated by the US Securities and Exchange Commission.

Do Kwon’s firm Terraform Labs raised more than $200 million from established investment firms to build projects based on Luna, a cryptocurrency, and TerraUSD, an “algorithmic stablecoin” pegged to the value of one US dollar. Instead of holding cash reserves, bonds, or other assets, TerraUSD automatically traded Luna to maintain its peg.

Luna shot up to a price of $116 in early 2021. Kwon would eventually acquire $3.5 billion worth of bitcoins for participating in the Luna Foundation Guard, a nonprofit organization designed to shore up Luna and TerraUSD against market volatility.

It didn’t work. In early May, the price of Terra fell to mere cents during a rapid sell-off, while Luna plummeted from $80 to less than 2 cents. The Moon Foundation Guard sold and distributed almost all of his 80,000 bitcoins, saving just over 300 to compensate investors. The organization denied claims that it bailed out Luna’s largest “whale” investors with the coins, though it never provided evidence of this.

The near-total collapse of the Moon/Terra ecosystem, worth about $40 billion in early May 2022, spurred further $300 Billion Crypto Liquidation and Divestmentthough it had already been running quietly.

Kwon became known as an arrogant and aggressive figure on “crypto Twitter” and in decentralized finance circles. He named his first daughter Luna, after her coin. He frequently mocked and dismissed critics for labeling them as “poor”, including a British economist who questioned Terra’s stability during a sell-off. After the collapse, Kwon publicly made plans to relaunch Terra as Terra 2.0.

Earlier this month, another Kwon-related crypto coin was launched: “JailKwon”, a meme coin which claims it will use the proceeds to offer cryptosecurity education and market analysis. rose to a all-time high cap of over $300,000 the day Kwon’s arrest warrant was issued.


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