The founder of the cryptocurrency terra is indicted in the US for fraud

“Police in Montenegro have arrested a person suspected of being one of the world’s most wanted fugitives, South Korean Do Kwon, co-founder and CEO of Terraform Labs,” Filip Adzic tweeted.

Both were detained at the airport in the capital, Podgorica, in possession of “false documents”, when they tried to board for Dubai with false Belgian and Costa Rican passports. They were the subject of an arrest warrant issued by their country of origin.

“We are waiting for official confirmation of his identity,” Filip Adzic said.

Interpol issued a red notice in September to locate him, at the request of South Korean prosecutors. Prosecutors had asked the South Korean Foreign Ministry to revoke his passport, saying Do Kwon was “on the run.”

The US stock market police, the SEC, launched a procedure in mid-February against Do Kwon for having “orchestrated a fraud involving billions of dollars in crypto assets.”

fell to zero

Beyond investor losses, the fall of Terraform Labs and Terra rocked the global cryptocurrency market.

Terraform Labs proposed a supposedly stable cryptocurrency, called “stablecoin”, the terra.

The price of a stablecoin is backed by that of a traditional currency or by tangible assets, ensuring investors more stability in the volatile world of cryptocurrencies.

But the stability of some of these cryptocurrencies is not ensured by currency reserves, but by an algorithm that decides based on the supply and demand of another cryptocurrency.

Terra was backed by the crypto asset developed by the Luna Foundation Guard.

The SEC believes that Terraform and Do Kwon “repeatedly misled investors” by claiming that a popular Korean payment app had used the same technology as terra to pay for transactions, which would increase the value of luna.

Terraform Labs’ system “was simply a fraud” in which the defendants controlled the price and not computer code, said an SEC official, Gurbir Grewal.

In April 2022, the value of terra reached its highest level. According to CoinMarketCap, it was then the fourth most important stablecoin and the tenth leading cryptocurrency by market value.

A month later, terra had lost more than half its value in just 24 hours, sparking a wave of panic.

Then it plummeted to zero, just like Luna, wiping out the savings of many small investors.

South Korean authorities have opened several criminal investigations into the case.