Key Highlights:
- Do Kwon continues to deny being in hiding from the authorities despite not honoring investigation invites;
- Kwon’s latest interview with Laura Shin and the Red Notice on him;
- The downfall of Terraform Labs in May 2022 that shook the crypto industry to its marrow,
- Increased regulatory scrutiny following Terra meltdown.
Is Do Kwon Hiding from Authorities?
Controversial Terraform Labs founder Do Kwon has asserted that he is not hiding from or evading South Korean law enforcement agencies who are looking to get Kwon to face trial for his involvement in what is described as the biggest meltdown in crypto history. Prosecutors from the Asian nation recently revealed that they had secured a global arrest order for the CEO of the embattled Terraform Labs.
This would not be the first time Kwon has denied evading South Korean prosecutors, even though these prosecutors have argued that he is indeed avoiding capture.
In September, Kwon responded to a tweet on his whereabouts, saying he was writing code in his home:
Source: Twitter
In another tweet that same day, the crypto developer said he was making no effort to hide and even claimed he was taking strolls to public spaces:
Source: Twitter
What’s interesting is that in all his claims of “not hiding,” Kwon has refused to disclose what country he was in. Kwon’s Twitter location showed that he was in Singapore, but the Singapore Police Force reported Kwon was not in the country.
The latest denial of being in hiding comes in an interview with Laura Shin, a former Forbes editor, and crypto-journalist.
Kwon Sits in a Virtual Interview with Laura Shin
Sitting in an interview session with Kwon on her Unchained Podcast on YouTube, Laura Shin started by asking the Terra CEO why he has yet to return to South Korea to answer the international arrest warrant out on him and clear the air.
Source: YouTube | Unchained Podcast Interview
According to comments from a representative of the Seoul Southern District Prosecutors’ Office in a CNBC interview in late September, Interpol has issued a “Red Notice” on Kwon.
However, Kwon argued that a Red Notice does not necessarily translate to an international arrest warrant. Kwon explained, “We have made a request to check on the status of the Red Notice, but as far as I understand it is not an international arrest warrant, and it states so explicitly in its website.”
The cryptocurrency developer further stated that every country “can interpret a red notice the way it sees fit,” arguing that he hasn’t been living in South Korea since 2021 and suggesting reports that he “returned” to the country are inaccurate.
However, Interpol has made it clear what its definition of a Red Notice is, and international arrest pretty much describes it. According to data from the official Interpol website, a Red Notice is defined as:
“A Red Notice is an order to law enforcement agencies around the world to find and temporarily detain a suspect pending extradition, surrender, or other legal action. An international arrest warrant is not the same as a Red Notice.”
Kwon also argued against several other inquiries in the 88-minute podcast interview, which will likely infuriate bereaved Terra investors even more.
While the Red Notice has yet to flush Do Kwon from wherever he might be, another unexpected factor might do the job. Reports suggest that Kwon’s passport became invalid on October 19 2022, which could force Kwon to act. An invalidated passport means he risks deportation by local authorities, as is standard procedure.
How it All Started: The Do Kwon $60 Billion Meltdown Story
Do Kwon was responsible for TerraUSDClassic (USTC) — an algorithm-backed Stablecoin — and its counter-balancing cryptocurrency LunaClassic (LUNC) both suffered a $60 billion meltdown to almost nothing in May 2022 and dragged the rest of the market to heart-wrenching lows.
Source: CoinMarketCap | USTC YTD Chart
Source: CoinMarketCap | LUNC YTD Chart
The incident, which has been described as the worst meltdown in the history of crypto, led to a chain of events that caused Three Arrows Capital (3AC) and other large crypto lenders to go bust. That said, the biggest losers in the crash were retail investors, who were in the millions.
After its dramatic rise to prominence in the crypto market and price rally over a relatively short period, the Terra-suite cryptocurrencies attracted numerous enthusiastic followers who called themselves “Lunatics,” a play on the word LUNA. However, as quick as it rallied, so did it fizzle out once the blockchain collapsed, with investors losing their capital, life savings, and in some cases, their lives. Kwon, who was previously loved and praised by the Lunatics quickly became the number one enemy, which became the main catalyst for the ongoing manhunt.
It remains unknown what Kwon’s fate would be, but one thing for certain is that authorities will likely try to use him to make an example as a deterrent against such risky practices.
Aftershocks: Do Kwon Saga Intensifies Crypto Regulation Efforts
Over the course of cryptocurrency’s 13-year history, numerous projects have risen and fallen, but none have attracted as much regulatory attention as Terra’s collapse. Consequently, this crash has served as an impetus for increased regulation in the industry.
The broader crypto market has yet to recover from the Terraform-induced crash, although prevailing macroeconomic and geopolitical factors may be hampering recovery.
Regulators are working tirelessly to deliver crypto regulations to ensure a repeat of the USTC/LUNC crash never repeats itself. In September, US lawmakers introduced a bill to ban all algorithm-backed Stablecoins, which is bad news for decentralized dollar alternatives like MakerDAO’s DAI.
The Terra crash also prompted other US regulators to focus on providing guiding rules for the crypto space, especially Stablecoins. Shortly after the crash, US Treasury Secretary Janet Yellen asserted that crypto legislation would be available by the end of the year. She urged lawmakers from both of the major parties to work together to pass laws in line with a regulatory framework for Stablecoins.
Source: Bloomberg | US Treasury Janet Yellen
Meanwhile, Max Kordek, a co-founder of Lisk, previously predicted in an interview with Cointelegraph that lawmakers would use the Terra collapse as an avenue to push for central bank-issued digital currencies, or CBDCs.
