South Korea reportedly freezes $39.6 million in crypto belonging to Terra founder Do Kwon, Kwon says it isn't his

South Korean prosecutors have reportedly frozen $39.6 million in crypto assets belonging to Do Kwon, the founder of Terraform Labs and creator of the failed Terra blockchain project. South Korea had also previously issued a warrant for his arrest.

Kwon claims that the report is a "falsehood", and "I don't know whose funds they've frozen". This joins his other claims, such as that he is "not 'on the run' or anything similar" (he is), and that Interpol didn't issue a red notice for him (they have).

South Korea issues arrest warrant for Terra founder Do Kwon

A South Korean court has issued a warrant for the arrest of Do Kwon, the founder of the Terra ecosystem, as well as five other people. According to Bloomberg the allegations include violations of Korea's capital markets law.

Kwon and the others named in the warrant are currently in Singapore. In June, Korea banned current and former Terraform Labs employees from leaving the country, and in July Korean authorities raided multiple exchanges in connection to their investigation.

Korean authorities raid seven cryptocurrency exchanges in relation to Terra investigation

Korean police cars parked outside an office building at nighttime. A lit "Upbit" sign is visible.Korean police executing one of the raids (attribution)
Prosecutors working on the fraud case around the May Terra/Luna collapse raided seven cryptocurrency exchanges in South Korea including Bithumb, Upbit, and Coinone. They also raided eight other offices and residences in connection to the investigation. The investigators are reportedly looking for evidence to determine whether Terra founder and CEO Do Kwon may have intentionally spurred the collapse of the ecosystem.

Terra decides to release "Terra 2.0", because apparently the way to fix a crypto catastrophe is with more crypto

Following the dramatic collapse of Terra earlier this month, the Terra ecosystem voted to pass a proposal by Do Kwon to create "Terra 2.0". The project intends to "effectively create a new Terra chain without the algorithmic stablecoin" — an odd choice given that the whole point of the original Terra was the stablecoin. The proposal also involves renaming the existing Luna ($LUNA) coin to "Luna Classic" ($LUNC), so that Luna 2.0 can take its place — a change that I'm sure will not cause any confusion whatsoever.

Billy Markus, one of the original creators of the Dogecoin cryptocurrency (both of whom have since left the project), tweeted, "luna 2.0 will show the world just how truly dumb crypto gamblers really are".

Class action lawsuits filed against Terra founders after crypto collapse

Following the collapse of the Terra ecosystem and its tokens TerraUSD and Luna, affected Korean investors have filed both criminal and civil lawsuits against the project's creator, Do Kwon. Represented by RKB & Partners, the lawsuit seeks to seize Kwon's assets and pursue fraud charges.

Another Korean group, calling themselves "Victims of Luna, UST coins", has amassed 1,500 members and reportedly plans to file a lawsuit against Kwon and Terraform Labs' other cofounder, Shin Hyun-Seong (who is also known as Daniel Shin, and is no longer with Terraform Labs).

This development may be particularly inconvenient for Kwon and Shin, given Terra's legal team quit the company the previous day.

On June 17, another investor filed a separate lawsuit against Terraform Labs, Kwon, and various others in a US court.

CoinDesk reports that Terra's Do Kwon was behind another failed algorithmic stablecoin project

In a scoop published shortly after the catastrophes began with TerraUSD and Luna, CoinDesk reported that Terraform Labs CEO Do Kwan had also previously led a different failed stablecoin project. Using the pseudonym "Rick Sanchez", Kwon created "Basis Cash" (BAC), another algorithmic stablecoin. Basis Cash also aimed to peg to the US dollar, but never actually achieved this value. The coin has traded far below $1 for most of its existence, dropping and remaining below $0.01 in early 2021.

Do Kwon has never disclosed his involvement with this failed project. CoinDesk wrote that although their "default position is to respect the privacy of pseudonymous actors with established reputations under their well-known handles unless there is an overwhelming public interest in revealing their real-world identities", there was now "such public interest as Kwon's UST stablecoin death spirals, wreaking havoc across the broader cryptocurrency market. Amid this precarious situation, investors deserve to know that UST was not Kwon's sole attempt at making an algorithmic stablecoin work." It was not made clear in the article when CoinDesk first learned of Kwon's connection to Basis Cash, though the authors later stated they'd learned of it the night before they published.

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