Interpol has issued a red notice for Do Kwon, requesting law enforcement agencies worldwide to locate and arrest the Terraform Labs founder whose blockchain startup collapsed earlier this year and wiped out investors’ $40 billion.
Kwon faces charges in South Korea for the wipeout of investors’ money, the prosectors said.
The notice against Kwon may set a wrong precedent for the crypto industry and hurt innovation, especially if Kwon didn’t knowingly defraud investors and customers, several industry executives have said in recent weeks. “Having met Do Kwon … how he is a person aside … I think the criminalization of Terra is a dangerous precedent,” said Haseeb Qureshi, Managing Partner of crypto investment fund Dragonfly, on a recent podcast. Qureshi, however, cautioned that he, like many others, don’t know all the details.
South Korean prosecutors have doubled down on their probe into Kwon in recent weeks, accusing earlier this month that the entrepreneur was “not cooperating,” and was “obviously on the run,” a day after Kwon indicated otherwise. They requested Interpol, the global police organisation, to issue a red notice for Kwon earlier this month.
Terraform Labs’ so-called stablecoin UST and cryptocurrency LUNA dramatically imploded in May after investors lost faith in the efficacy of its fundamentals. Kwon, with approval from the Terraform community, revived the crypto project but has avoided the so-called algorithmic stablecoin component for now. The depegging of TerraUSD (UST), the firm’s previous stablecoin, prompted the crash of LUNA token as they were intertwined.
The crash of LUNA token also contributed to the wipeout of Three Arrows Capital, once a high-profile crypto hedge fund. The demise of the fund severely impacted a number of crypto lenders including BlockFi from whom it had borrowed billions of dollars.
South Korea issued an arrest warrant for Kwon earlier this month, a move that saw many investors sell their positions in revived Luna token. “We are in the process of defending ourselves in multiple jurisdictions — we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months,” Kwon said in a tweet over the weekend.
In an interview with Coinage last month, Kwon said he hadn’t been in contact with South Korean authorities. After the two coins — Luna and TerraUSD — crashed earlier this year, which wiped out about $40 billion of hundreds of thousands of investors’ money, the investors in South Korea and the U.S. filed lawsuits against Kwon over illegal fundraising and fraud.