Terra Plummets as Do Kwon Faces Arrest in South Korea

In keeping with the prosecutor’s workplace, all six needed people from Terraform Labs presently reside in Singapore. 

Manhunt Begins for Do Kwon

The legislation is lastly catching up with Do Kwon.

A Wednesday report from South Korean information outlet Chosun Ilbo has revealed {that a} Seoul courtroom had issued arrest warrants for the Terra founder and 5 different people. The warrants alleged that Kwon and his accomplices violated Korean capital markets legislation, in line with a textual content message from the prosecutor’s workplace. 

In response to the information, Terra 2.0, the brand new blockchain that Kwon’s firm Terraform Labs launched after the collapse of the unique Terra blockchain, has been hit laborious. The community’s native LUNA token has dropped greater than 33% for the reason that information broke.

Unusually, LUNA skilled a considerable worth soar on September 9. The token soared over 300% in a day to hit a neighborhood excessive of $7.65 after earlier buying and selling in a good vary between $1.50 and $2.50 for a number of weeks. After as we speak’s dump, LUNA is presently buying and selling at round $2.79, down 63% from its current peak. 

Kwon’s arrest warrant comes after the widely-documented collapse of the Terra blockchain in Could. After briefly changing into the fifth-largest cryptocurrency by market cap, the blockchain’s ecosystem imploded when traders misplaced confidence within the greenback peg of the community’s UST stablecoin. Since UST was not backed by actual {dollars} and as a substitute held its worth by way of an algorithmic relationship with LUNA, the lack of confidence resulted in a loss of life spiral that despatched the value of LUNA and UST all the way down to fractions of a penny, wiping out greater than $40 billion of worth. LUNA was renamed LUNC (Luna Basic) when Terra 2.0 launched, and it’s taken a 21.8% hit on as we speak’s information, buying and selling at about $0.00028 at press time. 

Terra’s collapse triggered investigations from the U.S. Securities and Change Fee, Korean regulators, in addition to a number of class-action lawsuits. U.S. Treasury Secretary Janet Yellen additionally referenced the incident in a current speech calling for elevated stablecoin regulation. 

In July, South Korean officers raided a minimum of seven cryptocurrency exchanges in reference to investigations into Terraform Labs. A number of lawsuits additionally declare that Kwon and his firm defrauded traders and accused the agency of working a Ponzi scheme. 

In an interview with crypto media startup Coinage final month, Kwon stated he intends to cooperate with legislation enforcement when the time comes. Nevertheless, in line with the Seoul prosecutor’s workplace, Kwon and his associates presently reside in Singapore. 

Disclosure: On the time of scripting this piece, the writer owned ETH, BTC, and a number of other different cryptocurrencies.