A court in Seoul, South Korea, has issued an arrest warrant for Do Kwon, founder of blockchain platform Terraform Labs, lead developer of cryptocurrencies Luna and TerraUSD, whose collapse rocked the cryptocurrency market in May.
“An arrest warrant has been issued for a total of six people, including Do Kwon, who are currently in Singapore.” a spokesman for the prosecutor’s office said on Wednesday.
The issuance of the arrest warrant followed several months of investigations involving searches and document seizures at the company’s offices and South Korean cryptocurrency exchanges. According to Yonhap, Do Kwon and his associates are accused of violating national capital markets laws.
In May of this year, TerraUSD (UST), a Terraform Labs ecosystem-backed stablecoin that was one of the top ten cryptocurrencies in the world by market value, broke its peg to the US dollar after a one-off sale for around $300 million , fell in price almost to zero and pushed down the price of the Luna token.
Leading cryptocurrency exchanges, including Binance and Coinbase, have delisted the token. Investors in UST and Luna lost about $42 billion, according to analyst firm Elliptic.
The ensuing turmoil in the cryptocurrency market led to the collapse of a number of large crypto companies, including US crypto lender Celsius and one of the world’s largest crypto hedge funds, Three Arrows Capital (3AC).
To offset investors’ losses, Do Kwon launched a new network in late May with the distribution of its tokens among Luna and UST holders. At the same time, Luna owners received LUNA 2.0 tokens and Luna was renamed Terra Classic (LUNC). However, with news that an arrest warrant will be issued, Kwon’s plans are unlikely to materialize.