South Korean police have confirmed the identity of Do Kwon, the co-founder of Terraform Labs, after arresting him at an airport in Montenegro. Kwon had been a fugitive for several months and is accused of fraud and tax evasion related to the multibillion-dollar crash of Terraform’s cryptocurrency, TerraUSD, last year. Investors in TerraUSD and Luna filed complaints accusing Kwon of a Ponzi scheme, which led to the loss of billions of won following the crash of both coins. Kwon was arrested with one of his close aides, surnamed Han. Kwon’s identity was confirmed through fingerprint comparison.
Prosecutors have since sought an arrest warrant for Kwon on allegations including providing false information to investors and the violation of the capital market law. Interpol issued a red notice for Kwon, which is used for the highest level of wanted suspects and criminals. His passport has been invalidated, and prosecutors plan to discuss repatriation with Montenegro authorities.
Daniel Shin, another co-founder of Terraform Labs, is also under investigation on charges of gaining illegal profits before the collapse of the coins. TerraUSD was designed as a stablecoin pegged to stable assets like the US dollar. However, holders of TerraUSD and Luna lost more than an estimated $40 billion in market value after the stablecoin plunged far below its $1 peg in late May. This arrest is a significant step forward in the investigation into the collapse of Terraform’s cryptocurrency and the alleged fraud and tax evasion by its co-founders.