Wanted Terra crypto developer may be trying to escape probes but Do Kwon denies being on the run

Stablecoins claim to be a relatively safe haven in the highly volatile crypto market.
Stablecoins claim to be a relatively safe haven in the highly volatile crypto market.   -   Copyright  Canva
By Pascale Davies

The wanted crypto developer Do Kwon, who is accused of fraud by investors following the $45 billion (€45 billion) collapse of his cryptocurrencies Luna and TerraUSD, is reportedly trying to evade South Korean authorities.

Kwon moved from South Korea to Singapore, where the now defunct stablecoin issuer Terraform Labs, which he co-founded, has a base. However, Singapore Police Force said on Saturday he is currently not in the city-state.

South Korean prosecutors told Bloomberg in a text message on Monday that there has been “circumstantial evidence of escape” since he left Singapore. The media outlet said prosecutors declined to comment on whether the office knows of Kwon's whereabouts or if it will contact the international police agency Interpol.

Last week, Kwon was charged with violating the Capital Markets Act, and an arrest warrant was issued for him and five allegedly connected to the case who were believed to be in Singapore.

Kwon defended himself in a tweet on Saturday, saying he was not on the run and “we are in the process of defending ourselves in multiple jurisdictions - we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months”.

Terra's UST and its sister LUNA tokens lost nearly $45 billion (€45 billion) in value within 72 hours in May after it imploded, which caused other cryptos to take a hit with it and also caused the bankruptcy of three crypto companies.

The latest entity to collapse was Three Arrows Capital, which left billions being owed to creditors.

"I, and I alone, am responsible for any weaknesses that could have been presented for a short seller to start to take profit," Kwon said in an interview in August with the NFTV series Coinage. He also said he was cooperating with authorities and reiterated his commitment to Terra.

In late May, Terra re-launched the token Luna, without the element that caused Terra’s steep fall - its stablecoin UST.

But news of the arrest warrant has shocked the crypto market and caused the Luna token to slump more than 16 per cent on Wednesday (September 14).

Stablecoins claim to be a relatively safe haven in the highly volatile crypto market. They are meant to be tied to a fiat currency and usually maintain a 1-to-1 peg with the US dollar.

However, UST, created by Terraform Labs, was an algorithmic stablecoin, meaning that instead of having cash and other assets held in a reserve to back its token, it used a complex mix of code and Luna to stabilise the process.