When the TerraUSD stablecoins depegged in Might, it precipitated a $48 billion collapse within the luna cryptocurrency. 4 months later, on Wednesday, South Korean authorities issued an arrest warrant for Do Kwon, the founding father of Terraform Labs, in accordance with South Korean publication Chosun Ilbo. Kwon’s Terraform Labs was behind the Terra blockchain, the TerraUSD (UST) stablecoin and the luna cryptocurrency.
Although Terraform Labs relies in Singapore, Kwon was born in South Korea and stays a South Korean citizen. Kwon is one in all a number of Terra workers for whom an arrest warrant was issued, Chosen Ilbo experiences. Kwon is needed for violating South Korea’s Capital Markets Act, with prosecutors reportedly charging that UST and luna ought to have been categorized as “funding contract securities.” It mirrors strikes by the SEC to equally designate a number of main cryptocurrencies as securities.
Terra was contacted for remark however didn’t instantly reply.
Terra was recognized for its twin cryptocurrencies UST and luna. Like all stablecoins tied to the US greenback, UST was designed to at all times be value $1. Terra inspired individuals to park their financial savings in UST, providing a 19.5% yield charge — that means $10,000 deposited in UST would earn 19.5% curiosity yearly. In Might, nonetheless, the UST stablecoin depegged after $2 billion was faraway from the protocol. As soon as it turned clear that UST could be unable to retain its peg, each it and luna, the worth of which is tied to UST, collapsed. (Learn a extra detailed explainer right here.)
Previous to the crash, luna and UST had a mixed market cap just below $50 billion, in accordance with CoinMaketCap information. Crypto funding agency Three Arrows Capital had over $200 million invested in luna, and finally declared chapter in consequence. Its incapability to repay collectors led to Voyager Digital, a lending platform, to additionally declare chapter.
When Terra cofounder Daniel Shin’s dwelling was raided by South Korean authorities in July, Bloomberg reported that prosecutors had been investigating whether or not Kwon had evaded taxes by transferring crypto income into an offshore account.