South Korean prosecutors have refuted Do Kwon’s claim from over the weekend that he is not on the run and asked Interpol to issue a red notice against the Terraform Labs’ co-founder, escalating the public drama playing following the $40 billion wipeout on his cryptocurrency startup in May this year.
The Seoul Southern District Prosecutor’s Office said that Kwon was not cooperating with the investigation and had told them (through his lawyer last month) that he had no intention to appear for questioning, according to official statements cited by local media Yonhap. The prosecutors have asked Seoul’s foreign ministry to revoke Kwon’s passport and said they have “circumstantial evidence” that Kwon is attempting to escape.
An Interpol red notice, which is a call to law enforcement worldwide, can prevent individuals from being issued visas, can restrict their cross border travels and can allow law enforcement to “provisionally arrest a person pending extradition, surrender or similar legal action.”
Over the weekend, Kwon claimed he was not on the run from any government agency that had “shown interest to communication.” He added in a tweet: “We are in full cooperation and we don’t have anything to hide.”
Terraform Labs’ so-called stablecoin UST and cryptocurrency LUNA dramatically imploded in May after investors lost faith in the efficacy of its fundamentals. Major crypto exchanges including Binance and Coinbase delisted the token and discontinued several of its trading pairs. (Many exchanges have since revived limited support for the old token.)
Kwon, with approval from the Terraform community, has revived the crypto project, but this time has avoided operating a so-called algorithmic stablecoin. The depegging of TerraUSD (UST), the firm’s previous stablecoin, prompted the crash of LUNA token as they were intertwined.
The crash of LUNA token also contributed to the wipeout of Three Arrows Capital, once a high-profile crypto hedge fund. The demise of the fund also severely impacted a number of crypto lenders from whom it had borrowed billions of dollars.
South Korea issued an arrest warrant for Kwon last week, a move that saw many investors sell their positions in revived Luna token. “We are in the process of defending ourselves in multiple jurisdictions — we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months,” Kwon said in a tweet over the weekend.
In an interview with Coinage last month, Kwon said he hadn’t been in contact with South Korean authorities. After the two coins — Luna and TerraUSD — crashed earlier this year, which wiped out about $40 billion of hundreds of thousands of investors’ money, the investors in South Korea and the U.S. filed lawsuits against Kwon over illegal fundraising and fraud.
South Korean prosecutors have accused Kwon of financial fraud. Terraform Labs and the prosecutor’s office could not immediately be reached for comment.