A red Corner notice has been issued against Do Kwon, the founder of Terraform Labs. His blockchain startup company collapsed early this year. Investors lost $40B when his Terra cryptocurrency (Luna) and stablecoin TerraUSD (UST) collapsed. It forced prosecutors to start investigating Kwon and his associates. The South Korean prosecutors informed on Monday that he faces charges.
Industry experts have voiced concern that this development will establish a wrong precedent and hurt innovation and the crypto industry. It will be wrong to prosecute Kwon if he did not defraud customers and investors knowingly, according to many industry executives.
Dragonfly’s crypto investment fund managing partner Haseeb Qureshi said in a podcast that the criminalization of Terra will set a wrong precedent. At the same time, he cautioned that everyone should wait for more details of the prosecution charges before deciding.
Prosecutors in South Korea have intensified their probe in recent weeks against Kwon. Earlier this month, they accused the entrepreneur of not cooperating with them and being on the run. However, a day earlier Kwon said through a tweet said that he is not hiding from the authorities.
His whereabouts remain unknown but he indicated in the tweet that he is aware a red corner notice has been issued against him by Interpol for his arrest. The South Korean prosecutors requested Interpol to issue the red corner notice against Kwon.
Investors in May lost faith in the fundamentals of cryptocurrency Luna and stablecoin UST. Kwon obtained approval from Terraform community to revive the crypto project. However, he avoided including the stablecoin component. Luna token crashed when the previous stablecoin TerraUSD (UST) was debugged.