South Korea’s investigation of Do Kwon ‘unfair’: Terraform Labs

Terraform Labs Pte. Ltd., is accusing South Korean prosecutors of unfairness and violating the basic rights of its founder and chief executive officer (CEO), Kwon Do Hyung, widely known as Do Kwon, even as he eludes authorities seeking to investigate the multibillion dollar collapse of the Terra-LUNA stablecoin project.

“We believe that this case has become highly politicized, and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law,” said the Terraform Labs spokesperson in a statement sent to The Wall Street Journal (WSJ).

The company’s main objection is to the Sept. 14 warrant for arrest sought by South Korean prosecutors for Kwon and his five associates. 

The warrant alleged that Kwon, a South Korean citizen, violated the country’s capital markets law, after prosecutors deemed Terraform’s Luna cryptocurrency, now Luna Classic, a security. The company denies that assertion. 

“We believe, as do most in industry, that Luna Classic is not, and has never been, a security, despite any changes in interpretation that Korean financial officials may have recently adopted,” a spokesperson for Terraform Labs told the WSJ.

Terraform Labs did not respond to Forkast’s request for comment on the company’s claim that the investigation is unfair and fails to uphold Kwon’s rights.

Alongwith the arrest warrant, South Korean prosecutors asked Korea’s foreign affairs ministry to cancel his passport and sought the issuance of a ‘Red Notice’ by the International Criminal Police Organization (Interpol). The notice asks law enforcement agencies in 195 member countries to locate and provisionally arrest an individual, in this case Kwon.

However, on his verified Twitter handle, Kwon claimed he is making “zero efforts to hide” and is willing to cooperate with any government agency that wants to communicate.

In the WSJ interview published on Wednesday U.S. time, the Terraform Labs spokesperson refused to reveal Kwon’s current location citing reported threats to the physical wellbeing of the company founder and his family. There were reported attempts to break into his homes in both South Korea and Singapore, Terraform Labs said without explaining why he won’t speak to authorities in his home country and the U.S. 

Kwon’s wife reportedly sought emergency protection from police in Seoul after a South Korean male who claimed to be an investor in the Terra-LUNA stablecoin project visited their family residence seeking Kwon. The man received a summary indictment and a fine of a million Korean won (around US$700) for breaking and entering charges.

Since May, South Korean prosecutors have been investigating Kwon, and current and former Terraform Labs employees for fraud and unauthorized deposit-taking charges. 

At the time of publication, the Seoul Southern District Prosecutors’ Office in charge of the Terra-LUNA investigation did not reply to Forkast’s request for a comment on Terraform Labs’ latest statement.