Terra Plummets as Do Kwon Faces Arrest in South Korea

Key Takeaways

  • A Seoul courtroom has issued an arrest warrant for Terra co-founder Do Kwon.
  • In response, the Terra blockchain’s native LUNA token has crashed over 33%. LUNC can be down over 20%.
  • Kwon has beforehand said he intends to cooperate with legislation enforcement.

In accordance with the prosecutor’s workplace, all six needed people from Terraform Labs presently reside in Singapore. 

Manhunt Begins for Do Kwon

The legislation is lastly catching up with Do Kwon.

A Wednesday report from South Korean information outlet Chosun Ilbo has revealed {that a} Seoul courtroom had issued arrest warrants for the Terra founder and 5 different people. The warrants alleged that Kwon and his accomplices violated Korean capital markets legislation, in accordance with a textual content message from the prosecutor’s workplace. 

In response to the information, Terra 2.0, the blockchain that Kwon’s firm Terraform Labs launched after the collapse of the unique Terra blockchain, has been hit onerous. The community’s native LUNA token has dropped greater than 33% because the information broke.

LUNA/USD chart (Supply: CoinGecko)

Unusually, LUNA skilled a considerable value soar on September 9. The token soared over 300% in a day to hit a neighborhood excessive of $7.65 after earlier buying and selling in a good vary between $1.50 and $2.50 for a number of weeks. After right this moment’s dump, LUNA is presently buying and selling at round $2.79, down 63% from its latest peak. 

Kwon’s arrest warrant comes after the widely-documented collapse of the Terra blockchain in Could. After briefly changing into the fifth-largest cryptocurrency by market cap, the blockchain’s ecosystem imploded when traders misplaced confidence within the greenback peg of the community’s UST stablecoin. Since UST was not backed by actual {dollars} and as an alternative held its worth by means of an algorithmic relationship with LUNA, the lack of confidence resulted in a demise spiral that despatched the value of LUNA and UST right down to fractions of a penny, wiping out greater than $40 billion of worth. LUNA was renamed LUNC (Luna Traditional) when Terra 2.0 launched, and it’s taken a 21.8% hit on right this moment’s information, buying and selling at about $0.00028 at press time. 

Terra’s collapse triggered investigations from the U.S. Securities and Alternate Fee, Korean regulators, in addition to a number of class-action lawsuits. U.S. Treasury Secretary Janet Yellen additionally referenced the incident in a latest speech calling for elevated stablecoin regulation. 

In July, South Korean officers raided at the least seven cryptocurrency exchanges in reference to investigations into Terraform Labs. A number of lawsuits additionally declare that Kwon and his firm defrauded traders and accused the agency of operating a Ponzi scheme. 

In an interview with crypto media startup Coinage final month, Kwon mentioned he intends to cooperate with legislation enforcement when the time comes. Nevertheless, in accordance with the Seoul prosecutor’s workplace, Kwon and his associates presently reside in Singapore. 

Disclosure: On the time of penning this piece, the writer owned ETH, BTC, and several other different cryptocurrencies. 

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