Last Wednesday, the Seoul Southern District Prosecutor’s Office issued arrest warrants for Kwon and five others who worked at Terraform Labs, the company Kwon co-founded and both currencies. Prosecutors did not list charges, but investors have said they deceived them into promoting the coins. TeraUSD – which uses a computer program that claims to peg its value to the US dollar – and a related token known as Luna both took off over the past year, each of which The price rose dozens of times before crashing in May.
A Terra spokesperson did not respond to a request for comment. Kwon also did not respond to a request for comment. He said on Twitter on Sunday that “we are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to a very high standard of integrity, and look forward to clarifying the truth over the next few months.”
The red-notice request was originally informed of by Financial Times.
The Kwon case is being closely watched as an indication of how aggressively law enforcement will pursue those allegedly engaged in illegal activities in the crypto sector. Treasury Department last month continuing ban On Tornado Cash, which helps anonymize crypto transactions, in a strong example of an action on tech-based financial instruments.
But individuals discoveries in crypto are very rare, and Kwon’s case could be a bellwether for how other projects that have lost significant amounts of value can be targeted in the courts – and if, ultimately, some investors. You can get your money back.
Kwon, 31, graduated from Stanford University and worked at Apple for several years before returning to his home country to found several crypto projects, including Luna. Before the spring crash, Kwon was hailed as a visionary and even attracted a cult of everyday fans known as “lunatics”.
Nor was it just retailers – Terraform also raised money from related financiers such as Silicon Valley VC firm Lightspeed Venture Partners.
But a quick sell-off in May began for still unclear reasons, losing more than $40 billion in value, according to analysis firm Elliptic, as the price of Luna dropped to nearly zero and teraUSD from $1 to $0.11. The collapse helped trigger a widespread crypto crash Affected dozens of other properties and companies.
Bitcoin has dropped from nearly $40,000 to less than $20,000 since the collapse of Terra, and the total market cap of the crypto has fallen. over a trillion dollars Within a few months.
Kwon attempts to relaunch Luna shortly breach of many investors.
Law-enforcement experts said they believed it was possible to prosecute the entrepreneur, but given the uncertainties of crypto, the line between fraud and risky investments in the industry is often blurry.
William Callahan III, a former special agent for the Drug Enforcement Administration, said, “If someone goes to the bank and holds it for a lot of money with a videotape of the whole thing, it’s a pretty clear case.” Director of Government and Strategic Affairs for a crypto company called Blockchain Intelligence Group. “This kind of investigation and prosecution requires an even more unique set of skills.”
He said the case against Kwon is likely to be ongoing to determine whether it can be proved that he intentionally misled investors into stumping for coins or furthered a good faith campaign for a risky-but-legal-enterprise. were increasing.
According to local media, some of the evidence gathered so far by South Korean investigators, Involved It is alleged that Kwon and other Terraform executives decided to close their South Korean offices just a week before the currencies crashed. Kwon has said that the shuttering had been going on for a long time.
Kwon’s search took a real social-media turn on Sunday when Kwon, outspoken on Twitter, denied that he was a fugitive.
“I am not ‘on the run’ or anything like that – to any government agency that has shown interest in communicating, we are in full cooperation and we have nothing to hide,” he said. deployment of.
But Seoul prosecutors immediately denied this. “Obviously he is absconding,” the office said in a statement. According to Local news media agency Yonhap.
Kwon quipped that he would only give his coordinates if “1) we are friends, 2) we have plans to meet 3) we engage in a GPS-based web 3 game.”