South Korean authorities have issued an arrest warrant for Do Kwon, the co-founder of now defunct stablecoin issuer Terraform Labs, Bloomberg reported on 14 September.
The publication cited a “text message” from South Korea’s prosecutor’s office, which explained that a court in Seoul had issued a warrant for the arrest of Kwon and five other people, alleging they had violated the country’s Capital Markets Act. The prosecutor’s office also noted that all six individuals were currently located in the port city of Singapore.
Terraform Labs is the entity behind the $40 billion Terra ecosystem, which collapsed back in May after its algorithmic stablecoin TerraUSD (UST) lost its peg to the U.S. dollar, reaching an all-time low of $0.006 in June. The collapse of UST also affected Terra’s native token LUNA — once a top-10 cryptocurrency — which at one point dropped in price by 99%.
This event triggered a dominos effect, which negatively affected the majority of the cryptocurrency market. Singapore-based crypto hedge fund Three Arrows Capital (3AC) was hit especially hard by the collapse of Terra, with the company filing for bankruptcy shortly after its exposure to LUNA was revealed. This, in turn, resulted in crypto lender Celsius and crypto broker Voyager Digital to file for bankruptcy after they were unable to cover their losses from the exposure to 3AC, leading to the current state of the entire crypto market.