The Terraform Labs creator, Do Kwon, is currently under arrest threat from South Korean authorities, despite the joy of the LUNC community about a prospective return for the Terra Luna Classic (LUNC) token.
According to the financial crimes division of the Supreme Prosecutors’ Office, a South Korean court has issued an arrest order against Do Kwon, the co-founder of the now-defunct stablecoin issuer Terraform Labs.
Five more people were named in the warrant, according to Bloomberg News, which cited a text message from the prosecutors’ office. According to the article, they are accused of breaking the Capital Markets Act.
This year’s crypto winter began with the $40 billion Terra ecosystem and its algorithmic stablecoin (UST) collapsing, and the warrant was issued four months after that. It was the first domino to fall in that period.
A FUD assault that the Terra community initially thought was a market crash in May turned out to be one of the worst in cryptocurrency history, costing investors in TerraUSD (UST), now known as TerraUSD Classic (USTC), and Terra (LUNA), now known as Luna Classic, millions of dollars (LUNC). When the UST stablecoin dropped to an all-time low of $0.006 in June, it began to stray from its peg to the US dollar.
Aside from UST, LUNA experienced a sharp decline to a record low of $0.0000009, forcing suicide hotlines to be posted on the project’s Reddit forum. LUNA once achieved its peak at $119.18 in April.
The Terra crisis also had an impact on other decentralized finance (DeFi) protocols, which resulted in a decrease of 80% or more for projects connected to the stablecoin.
Do Kwon Ready to Comply
Another company that declared bankruptcy when the amount of its exposure to the Terra network was revealed was the Singapore-based hedge fund Three Arrows Capital. With billions in debt to creditors, the collapse of Three Arrows created a trail of shaky loans throughout the cryptocurrency sector.
Kwon had insisted he is helping the authorities in his first public interview from last month. Kwon engaged legal counsel from a South Korean law company on August 17, just a few days after claiming that the authorities had not yet contacted him. The department in charge of looking into the Terra collapse reportedly received a letter of appointment from the founder of Terra.
On August 16, the creator of Terra also ended his silence in an effort to defend himself against different charges. Community users nonetheless condemned the Terra CEO despite Kwon’s efforts, drawing comparisons between his predicament and that of Tornado Cash’s developer, who was detained for designing a privacy code.