He founded a crypto venture that has experienced one of the most spectacular meltdowns in recent months.
Du Kwon, the co-founder of Terraform Labs, was once one of the lords of the cryptocurrency industry, but is now unpopular.
Last May, its sister tokens Luna and UST lost all of their value in a matter of days, eliminating at least $55 billion. Many retail investors lost their last savings, while for institutional investors, including prominent crypto firms, this was the beginning of the end.
Indeed, crypto lenders and brokers Celsius Network and Voyager Digital have filed for Chapter 11 bankruptcy due to their exposure to hedge fund Three Arrows Capital, which has invested heavily in Luna. Three Arrows Capital has been forced into liquidation.
Within days, he became one of the most hated people in the cryptocurrency industry. Authorities in the United States and South Korea, of which he is a national, have launched investigations.
I’m not a runaway
A few days ago, Seoul issued an arrest warrant for him and five others as part of the South Korean investigation. They are accused of fraud and violating local market laws. At the time of the arrest warrant, Do Kwon was living in Singapore.
But local police said on September 17 that Kohn was no longer in the country, indicating that he had fled. But Kwon responded by saying that he was not a fugitive and that he was cooperating with the South Korean authorities.
“I am not a ‘runaway’ or anything similar,” Kwon wrote on Twitter on September 17, “As for any government agency that has expressed interest in outreach, we are in full cooperation and have nothing to hide.” “
He added that he was preparing his defense to clarify matters in the coming months.
“We are in the process of defending ourselves in many 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.”
Despite the serious accusations leveled at him, Kwon attached his tweets to another humorous tweet mocking the fact that he is a fugitive.
“Tbh hasn’t run in a while, I need to cut some calories,” Kwon said sarcastically.
Prosecutors disagree with Kwon
But the South Korean authorities question his account. Korean prosecutors told Yonhap News Agency that Kwon flew to Singapore “obviously on the run” around late April and dissolved the company’s Korean subsidiary, Terraform Labs Korea, at the time “to avoid investigation.”
Yonhap reported that Kwon is not cooperating with the prosecution’s investigation, and has informed the prosecution through a lawyer that he does not intend to appear before them.
“Currently, we are in the process of locating and apprehending the suspect, Do Kwon,” South Korean authorities said.
According to the Straits Times, Kwon has a Singapore work permit – Employment Permit, or EP – which expires on December 7. His application for renewal is under review, but he is said to be in danger as South Korean authorities have moved to invalidate his permit. A passport to force him to return to the country.
The Straits Times reported that Kwon had already rejected an application for a permit allowing foreign entrepreneurs to start and operate a business in Singapore.
Luna and UST were the first dominoes to collapse in what would later turn into a liquidity crunch for the crypto sector.
The two distinct tokens crashed after the Earth’s treasuries lost their peg to the dollar, their basis qualifying as a stablecoin. These cryptocurrencies are linked to more stable assets, such as the US dollar or gold. From May 9 to May 13, at least $55 billion of market capitalization disappeared, causing many investors to suffer huge losses.
Underground treasuries were an algorithmic stablecoin, which was backed not by dollar reserves but by its sister asset, the Luna. Algorithmic stablecoins differ from centralized alternatives such as Tether or USD, which are backed by physical dollars or equivalent assets stored in a bank.
Last June, Terraform Labs employees reportedly told the US Securities and Exchange Commission that Do Kwon was cashing out $80 million a month before the collapse of UST and Luna Tokens.