The creator of the blockchain ecosystem Terra says he is not wanted. Is this really the case?
A week ago, South Korean law enforcement authorities asked Interpol for assistance in locating and arresting the founder of cryptocurrency company Terraform Labs, Do Kwon. The suspect was later issued a “red notice” – the right to request a provisional arrest of a person within the agency’s jurisdiction – upon request. According to law enforcement officials, Kwon’s exact whereabouts are unknown and he himself does not want to make contact with the investigation. We tell you more about the situation.
The reason for the attention on Do Kwon is simple: in May 2022, the Terra ecosystem experienced a collapse that began with the unbundling of the UST algorithm-stablecoin from the dollar. This was followed by the mass printing of the LUNA token, which led to its near-total devaluation.
Today, the old LUNA coin is called Terra Luna Classic (LUNC). Its current exchange rate is 100 per cent off its peak. The funny thing is that the cryptocurrency managed to rise 26,000 percent from its price bottom, set on May 13.
Luna Classic exchange rate chart for the last 180 days
At the same time, “stabelcoin” UST Classic is valued at 3 cents, which means that no one obviously plans to solve the coin’s problem.
UST Classic rate chart for the last 180 days
According to experts, investors lost 40 to 60 billion dollars because of the collapse of the ecosystem. This is why the authorities are looking for Do Kwon.
Where is the creator of Terra LUNA?
Do Kwon has been in the news headlines for months now. As we noted, in the spring the native token Luna, now called Luna Classic, collapsed to almost zero due to the loss of parity of the TerraUSD algorithm-stablecoin. The event resulted in huge losses for both individual investors and entire companies, some of which went bankrupt.
The day before, Kwon said on Twitter that allegedly no one was looking for him. He also says he is willing to cooperate with the police, but for some reason has not taken any action. Meanwhile, the founder of Terraform Labs is allegedly trying to withdraw several thousand bitcoins. According to members of the blockchain community, he may then go into hiding for good.
The rise and fall of Terra
Rumors that Kwon was aware of Terra’s shaky balance sheet long before the collapse but turned a blind eye to it because he was attracting new users this way surfaced on the Internet after the collapse. Experts concluded that Terra’s problems were caused by simple negligence on the part of Terraform Labs’ management. Naturally, law enforcement authorities in South Korea, where Kwon is based, could not leave such a massive scandal unattended.
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At the moment, the local prosecutor’s office does not know the exact whereabouts of the suspect. Some speculate that he has fled the country and may be in Singapore. A notice of his possible arrival was also issued in July, meaning that Kwon should notify the relevant authorities when he returns to his home country.
According to CryptoPotato sources, the head of Terraform Labs responded to the situation on Twitter, where he stated that he is not on the run at all and is moving freely around town. Here is one of his tweets.
Yes, like I said, I’m not hiding. I walk around, I go to malls. Hardly any active crypto-enthusiast on Twitter hasn’t seen me live in the last couple of weeks.
Terra creator Do Kwon
Kwon also “didn’t find” information about him being wanted by Interpol on the organisation’s official page. True, the “red notice” served on him doesn’t have to be public, as commentators under his tweets rightly pointed out. Well, others wondered why a man wanted by Interpol was posting freely on Twitter.
If Kwon isn’t trying to escape, why would he rush to create a new cryptocurrency wallet and try to sell a large amount of BTC? Recall that Cryptoquant platform analysts recently claimed that a cryptocurrency wallet was created on behalf of Luna Foundation Guard (LFG) with Terraform Labs on September 15, through which 3,313 BTC were transferred to KuCoin and OKX exchanges.
Law enforcement authorities responded to this information: both trading platforms received a notice demanding that the funds be frozen. Only KuCoin complied, freezing 1,354 BTC. However, OKX management ignored the request, meaning the remaining 1,959 BTC could have already been sold and transferred to other wallets or platforms, Cointelegraph reported. All of these actions were allegedly carried out by Kwon just one day after the warrant for his arrest was issued, analysts believe.
We think the head of Terraform Labs is trying to give the appearance of assisting the investigation into the collapse of his project while he himself is outside South Korea. If Kwon really wanted to cooperate, there would be no question of him being wanted by Interpol; in addition, law enforcement agencies are unlikely to disseminate fake statements in such important cases.
Be that as it may, it is now up to the authorities to search for Kwon and, if necessary, deal with his deportation. How long this will take is unknown.
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