Last Wednesday, the Seoul Southern District Attorney’s Office issued an arrest warrant for Kwon and five other people who worked in both currencies and Terraform Labs, the company Kwon co-founded. Prosecutors did not mention the charges, but investors said he defrauded them into promoting the coins. TerraUSD – which used a computer program that claimed to peg its value to the US dollar – and a linked token known as Luna both took off in the past year, with each having multiplied dozens of times in value before crashing in May.
A spokesperson for Terra did not respond to a request for comment. Kwon also did not respond to a request for comment. “We are in the process of defending ourselves in several jurisdictions – we have held ourselves to a very high standard of integrity, and we look forward to clarifying the truth over the next few months,” he said on Twitter on Sunday.
The red notice request was originally mentioned by Financial Times.
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The Kwon case is closely watched as evidence of how powerful law enforcement can be in prosecuting those involved in allegedly illegal crypto activities. Last month the Treasury Sanctions issued on Tornado Cash, which helps anonymize crypto transactions, in a powerful example of a crackdown on technology-based financial instruments.
But going after individuals in cryptocurrency is very rare, and Kwon’s case could pioneer how to target other projects that have lost significant amounts of value in the courts — and if, eventually, some investors might get their money back.
The 31-year-old Kwon graduated from Stanford University and worked briefly at Apple before returning home several years ago to found a number of crypto ventures, including Luna. Prior to the spring incident, Kwon was hailed as a visionary and even attracted cult regular fans known as “Lunatics”.
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And it wasn’t just retailers – Terraform also raised funds from relevant funders such as Silicon Valley VC, Lightspeed Venture Partners.
But in May, a rapid sell-off began for reasons that remain unclear, resulting in a loss of more than $40 billion in value, according to the Elliptic analysis firm, as Luna’s price fell to nearly zero and TerraUSD price fell from $1 to $0.11 . The crash helped trigger a broader cryptocurrency crash that affected dozens of other assets and businesses.
Bitcoin has gone from around $40,000 to less than $20,000 since the Terra crash, and the overall cryptocurrency market cap has plummeted due to Over a trillion dollars In a few months.
Kwon made an attempt to relaunch Luna soon after, which angered many investors.
Law enforcement experts said they believe that suing the entrepreneur is possible but challenging given the volatility of cryptocurrency, where the line in the industry between fraud and risky investment is often blurred.
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William Callahan III, a former DEA special agent who now serves as an official, said: Director of Governmental and Strategic Affairs for a crypto firm called Blockchain Intelligence Group. “Investigating and prosecuting something like this requires a unique set of skills.”
He said the case against Kwon likely revolved around whether it could be shown that he intentionally misled investors into looking for the coins or that he was campaigning in good faith for a risky but legal venture.
Some of the evidence that South Korean investigators have collected so far, according to local media, includes Allegations that Kwon and other Terraform executives decided to close their South Korean offices just a week before the coins crash. Kwon said the shutdown has been a long time in the works.
On Sunday, Kwon’s stalking took a surreal turn on social media when Kwon, who has spoken candidly on Twitter, took to the platform to deny he was a fugitive.
“I am not a ‘runaway’ or anything similar – for any government agency that has expressed an interest in communicating, we are in full cooperation and have nothing to hide,” Spread.
But Seoul prosecutors quickly denied this. “He is clearly a fugitive,” the office said in a statement. to me Yonhap local news agency.
Kwon said sarcastically that he would only give up his coordinates if “1) we’re friends, 2) we have plans to meet 3) we participate in a 3rd GPS-based web game.”