Last Wednesday the Seoul Southern District Prosecutors Office issued an arrest warrant for Kwon and 5 different individuals who labored on each the currencies and Terraform Labs, the firm that Kwon co-founded. Prosecutors did not listing the expenses, however buyers have stated he defrauded them in selling the cash. TerraUSD — which used a pc program that claimed to peg its worth to the U.S. greenback — and a associated token generally known as Luna each took off in the previous yr, with every multiplying in worth dozens of occasions over earlier than crashing in May.
A Terra spokesman did not reply to a request for remark. Kwon additionally did not reply to a request for remark. He stated on Twitter Sunday that “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.”
The red-notice request was initially reported by the Financial Times.
The Kwon case is being watched carefully as an indication of how aggressively legislation enforcement will pursue these engaged in allegedly unlawful actions in the crypto area. Last month the Treasury Department issued sanctions on Tornado Cash, which helps anonymize crypto transactions, in a powerful instance of a crackdown on tech-based monetary instruments.
But the pursuit of people in crypto is way rarer, and Kwon’s case could possibly be a bellwether for the way different initiatives that misplaced giant sums of worth could possibly be focused in the courts — and if, finally, some buyers would possibly claw their a refund.
The 31-year-old Kwon graduated from Stanford University and briefly labored at Apple earlier than returning to his residence nation a number of years in the past to discovered quite a few crypto initiatives, together with Luna. Before the spring crash, Kwon was hailed as a visionary and even attracted a cult of on a regular basis followers generally known as “Lunatics.”
Nor was it simply retail merchants — Terraform additionally raised cash from respective financiers resembling Silicon Valley VC agency Lightspeed Venture Partners.
But in May a fast selloff started for still-unclear causes, prompting the lack of greater than $40 billion in worth, in line with evaluation agency Elliptic, as the value of Luna plunged to just about zero and TerraUSD went from $1 to $0.11. The collapse helped set off a broader crypto crash that affected dozens of different property and firms.
Bitcoin has gone from almost $40,000 to below $20,000 since the Terra collapse, and the complete market worth of crypto has plummeted by more than a trillion dollars in only a few months.
Kwon made an try and relaunch Luna shortly after, to the outrage of many buyers.
Law-enforcement specialists stated that they believed prosecution of the entrepreneur was doable however difficult given the vagaries of crypto, with the line in the trade between fraud and dangerous funding usually blurry.
“If someone walks into a bank and holds it up for a lot of money with a videotape of the whole thing, well that’s a pretty clear-cut case,” stated William Callahan III, a former DEA particular agent who now serves as director of presidency and strategic affairs for a crypto firm referred to as the Blockchain Intelligence Group. “Investigating and prosecuting something like this requires a much more unique set of skills.”
He stated the case in opposition to Kwon would possible flip on whether or not it may be confirmed he knowingly misled buyers in stumping for the cash or was mounting a good-faith marketing campaign for a risky-but-legal-venture.
Some proof gathered by South Korean investigators to date, in line with native media, includes allegations that Kwon and different TerraKind executives determined to shut their South Korea places of work only a week earlier than the currencies crashed. Kwon has stated the shuttering was lengthy in the works.
On Sunday the pursuit of Kwon took a surreal social-media flip when Kwon, outspoken on Twitter, took to the platform to disclaim he is a fugitive.
“I am not ‘on the run’ or anything similar – for any government agency that has shown interest to .communicate, we are in full cooperation and we don’t have anything to hide,” he posted.
But the Seoul prosecutors rapidly denied it. He is “obviously on the run,” the workplace stated in a press release, according to native news media company Yonhap.
Kwon quipped that he would solely give away his coordinates if “1) we are friends, 2) we have plans to meet 3) we are involved in a gps based web3 game.”
