September 15, 2022 11:09
Prosecutors have obtained an arrest warrant for Terraform Labs CEO Do Kwon after a probe into the spectacular collapse of the stable coin TerraUSD and its digital coin counterpart Luna.
The arrest warrant is valid for a year. Kwon is thought to be living in Singapore, but prosecutors here want to cancel his passport and seek the assistance of Interpol to make the arrest.
The Chosun Ilbo has learned that the Seoul Southern District Prosecutors' Office recently obtained arrest warrants for Kwon and five others, including Terraform founding member Nicholas Platias. All of them are thought to be in Singapore.
Prosecutors charged Kwon with violating the capital market law because they believe that Terraform engaged in fraudulent transactions by providing exaggerated or false information to investors to inflate the price of the Luna, which constitutes an "investment contract security" -- a financial product in which investors park their money in a joint business opportunity and share the profits or losses.
This is the first time that the capital market law is being applied to a cryptocurrency. If found guilty, Kwon and the others could be liable to fines totaling three to five times their profits or at least a year in prison.
The Luna is designed to be linked to the TerraUSD, which was pegged to the dollar. Its total market capitalization soared to place it among the top 10 cryptocurrencies in the world, but it plummeted 99 percent in just a week when the TerraUSD's value tanked in May, causing W50 trillion to be wiped out (US$1=W1,391). More than 200,000 investors in Korea alone are thought to have lost their money.
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