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Cryptocurrencies

South Korea seeks to arrest developer of failed cryptocurrency Luna

Court accuses Do Kwon of fraud after value fell to nearly zero in May

The warrant seeks the arrest of six people who are currently residing in Singapore.   © Reuters

SEOUL (Reuters) -- A South Korean court has issued an arrest warrant for Do Kwon, the primary developer of cryptocurrencies Luna and TerraUSD, whose spectacular collapse in May roiled crypto markets around the world.

Kwon, also the founder of blockchain platform Terraform Labs, has been accused of fraud by investors in the wake of the collapse.

"An arrest warrant has been issued for a total of six people, including Do Kwon, who are currently residing in Singapore," a spokesperson for prosecutors said on Wednesday without elaborating on the reason.

Kwon did not immediately reply to a Reuters email seeking comment. The Singapore Police Force also did not immediately respond to a request for comment.

The arrest order comes after months of investigation and amid public outrage in South Korea over the collapse. Globally, investors in the two coins lost an estimated $42 billion, according to blockchain analytics firm Elliptic.

TerraUSD, a so-called stablecoin that was once among the top 10 cryptocurrencies globally by market value, broke its 1:1 peg to the U.S. dollar in May, plunging in value and sending paired token Luna plummeting with it. Unlike most other major stablecoins which are backed by other assets, TerraUSD's value was derived by complex algorithmic processes. 

The market turmoil that ensued led to the failure of several major crypto companies including U.S. crypto lender Celsius and Singapore-based crypto fund manager Three Arrows Capital. 

In an August video interview with crypto media platform Coinage, Kwon said he had moved to Singapore because of concerns about his family's safety and rejected suggestions that the relocation was due to the crash or an attempt to evade investigators.

Worldwide, several cryptocurrency developers have been arrested on a range of charges.

Dutch authorities last month arrested a 29-year-old man believed to be a developer for the crypto mixing service Tornado Cash on suspicion of money laundering. 

In May, Arthur Hays the co-founder and former chief executive of the cryptocurrency exchange BitMEX was sentenced to six months of house arrest after pleading guilty to violating the U.S. Bank Secrecy Act. 

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