Terra founder Do Kwon faces heat; Interpol issues red notice
Do Kwon, the founder of Terraform Labs, became notorious after his blockchain start-up collapsed and wiped investments to the tune of $40 billion. Interpol has now issued a red notice for the South Korean national. He is facing charges of fraud in South Korea. The notice was issued after Korean prosecutors sought Interpol's help in tracing the fugitive's whereabouts.
Why does this story matter?
- Kwon was at the epicenter of the massive crash in the crypto industry this year. Terraform's collapse spurred the $300 billion disinvestment and sell-off from crypto.
- Although Kwon has consistently maintained that he is not hiding from authorities, his actions in the past few weeks have shown otherwise.
- How the saga will be dealt with will have serious implications for the industry.
Luna and Terra fell by 99.99% in May
Kwon caught law enforcement agencies' flak after Terraform Labs' Luna, a cryptocurrency, and Terra USD, an algorithmic stablecoin pegged to the US dollar's value collapsed. In early 2021, Luna reached a high of $116. In May 2022, prices of Luna and Terra fell to mere cents, registering a nearly 99.99% fall from their highs. This fall wiped out investor money worth nearly $40 billion.
Kwon was believed to be living in Singapore
On September 14, South Korean prosecutors issued warrants against Kwon and five others, including Terraform's founding member Nicholas Platias. At the time, the Korean authorities believed that all six were in Singapore. Singapore police recently confirmed that Kwon is not in the city-state. Following the confirmation, the authorities requested Interpol's help in tracing him. The red notice is a result of that.
Prosecuting Kwon will hurt innovation in crypto industry
The red notice against Kwon has caught the crypto industry by surprise. Many believe that the criminalization of Terra is unnecessary and prosecution of Kwon would set a wrong precedent for the industry and curtail innovation. Most industry insiders doubt whether Kwon intentionally tried to defraud investors or not. Kwon is known in business circles for his aggressive and belittling behavior.