A South Korean court has issued an arrest warrant for the CEO and founder of Terraform Labs, Do Kwon. The warrant was issued following an earlier report made by a resident of Seoul after the Terra UST depegged from the USD. The collapse resulted in the crash of the Terra token LUNA.
According to a report seen on Bloomberg, the Terraform Labs founder was accused of violations of the South Korean capital market. A copy of the warrant from the prosecutor’s office in Seoul shows that Do Kwon and five others were marked for arrest in the warrant.
A Big Crash
Do Kwon heads Terraform Labs, the company behind LUNA, the internal token of the Terra ecosystem which crashed earlier in the year. The LUNA crash was the consequence of the loss of the dollar peg of the Terra stablecoin called Terra USD (UST). UST is an algorithmic stablecoin. This means that it is not backed by any asset but was supposed to maintain its peg to the dollar based on its coding mechanism. Even though Terraform Labs later made attempts to back the stablecoin with crypto assets, the loss of its dollar peg pulled down the Terra ecosystem.
A Partial Success At Recovery
A recovery effort has been partially successful after the Terra team implemented a series of proposals approved by the ecosystem’s decentralized autonomous organization (DAO).
The initial proposal mandated the Terra team to build two new tokens LUNA and UST while the previous ones were renamed LUNC and USTC or LUNA Classic and Terra USD Classic.
At the time of filing, USTC, the original Terra stablecoin that depegged is trading at $0.03655. The cryptocurrency has lost 25% in the past 24 hours. On the 7-day chart, the coin is down by 10%.
Terra LUNA Classic is trading at $0.00029892. The coin has lost 20% in the past 24 hours. On the 7-day chart, it is down by 22%.
Do Kwon has not made a statement regarding the warrant at the time of reporting.