Interpol has issued a red notice for Do Kwon, urging that law enforcement authorities globally seek and arrest the Terraform Labs founder, whose blockchain business crashed earlier this year, wiping out investors' $40 billion.
The notice against Kwon may create a bad precedent for the crypto industry and may harm innovation, even if Kwon did not willfully defraud investors and customers, according to many industry insiders in recent weeks.
"Having met Do Kwon ... leaving how he is a person aside ... I think the criminalization of Terra is a dangerous precedent," Haseeb Qureshi, Managing Partner of crypto investment fund Dragonfly, said on a recent podcast.
But Qureshi was careful to point out that he, like many others, does not fully understand the situation.
According to the prosecutors, Kwon is accused of stealing investors' money in South Korea.
In recent weeks, South Korean prosecutors have intensified their investigation into Kwon, charging earlier this month that the businessman was "not cooperating" and "obviously on the run" despite Kwon's denials to the contrary. Early this month, they asked Interpol, the international police organization, to issue a red alert for Kwon.
Investors lost faith in the effectiveness of Terraform Labs' purported stablecoin UST and cryptocurrency LUNA in May, which led to a rapid collapse of the price. Kwon relaunched the cryptocurrency project with support from the Terraform community but has avoided the alleged algorithmic stablecoin component thus far.
The depegging of TerraUSD (UST), the firm's previous stablecoin, caused the LUNA token to crash because they were linked.
Kwon revealed a strategy in May to revitalize the Terra Ecosystem after its stablecoin UST and cryptocurrency LUNA crashed in the same month, sending the crypto markets down with them.
"Terra 2.0 is coming," Terra's official Twitter account tweeted. "With overwhelming support, the Terra ecosystem has voted to pass Proposal 1623, calling for the genesis of a new blockchain and the preservation of our community."
Kwon's arrest order was issued by South Korea earlier this month, which caused many investors to dump their holdings in the revived Luna token.
In a tweet earlier this month, Kwon stated, "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."
Three Arrows Capital, formerly a prominent cryptocurrency hedge firm, was completely destroyed as a result of the meltdown of the LUNA coin. The fund's bankruptcy had a significant negative impact on several cryptocurrency lenders, notably BlockFi from whom it had borrowed enormous sums of money.
