Do Kwon Associate At Terraform Labs Arrested By South Korean Authorities
South Korean authorities have apprehended the first suspect in the collapse of the Terra blockchain ecosystem.
On Oct. 6, reports of Yoo Mo‘s arrest as the leader of Terraform Labs’ business team surfaced in the Korean media.Later, district prosecutor Choi Sung-kook verified the reports to Forkast.
The Seoul Southern District Prosecutors’ Office alleges Yoo Moo violated the Capital Markets Act and engaged in fraud by influencing the value of the beleaguered stablecoin TerraUSD (UST), which has been rechristened to TerraUSD Classic (USTC).
An arrest order against Yoo, known to be a close confidante of Terra blockchain founder Do Kwon, was issued in September.
Interpol also issued a Red Notice on Do Kwon on Sept. 26 asking law enforcement agencies across the world to find and temporarily detain him pending extradition, surrender, or other legal action.
A Terraform Labs spokesperson meanwhile claimed the investigation against the company’s top management in South Korea has turned political and that prosecutors had broadened their concept of security in response to pressure from the public.
Nearly a trillion dollars were lost in the crypto market after the $40 billion Terra ecosystem collapsed in May 2022.
There is currently no legal definition of non-standardized securities issued using a blockchain under the country’s capital market or electronic securities rules.
By the end of 2022, the Financial Services Commission, the nation’s financial regulator, will have prepared standards for security tokens.
Do Kwon’s passport will be revoked in 14 days, according to a statement made by the South Korean Ministry of Foreign Affairs.The Ministry also directed the return of the passport to the authorities. “If you [Kwon] keep the passport, the validity of your passport will be invalidated,” according to the statement.
If Kwon decides not to surrender his documents, he will not be able to use them and won’t be eligible for a reissue, making it challenging for him to leave South Korea or reside overseas.
This article was originally published on Benzinga and appears here with permission.