A Seoul court has issued an arrest warrant against Terraform Labs CEO Do Kwon and five top project managers for violating South Korean capital market rules, resulting in large losses for investors.
In May, the algorithmic stablecoin UST lost its peg to the US dollar, which subsequently brought down the LUNA rate due to a lack of reserves. This led to the fact that in just three days, crypto assets worth about $60 billion disappeared from the market. The court considered that the collapse of the Terra project provoked a massive fall in the cryptocurrency market.
Terraform Labs founder Do Kwon and other project leaders have come under scrutiny from US and South Korean law enforcement. In connection with the investigation into the activities of the company, Terra employees were forbidden to leave South Korea. Law enforcement officers were investigating whether the collapse of Terra was intentional, as the South Korean Internal Revenue Service had previously suspected the company of tax evasion.
Affected investors accuse Do Kwon of fraud. A Twitter user who goes by the pseudonym FatMan claims that Kwon withdrew $2.7 billion in fiat before the UST collapsed. However, Kwon maintains his innocence and denies any personal involvement in the collapse of the Terra ecosystem. He is confident that Terra 2.0 will improve the situation.
Some members of the cryptocurrency community suggest that the main reason for the shutdown of the project lies in its poorly designed and ill-conceived architecture. In particular, this opinion is shared by the technical director of Tether Paolo Ardoino (Paolo Ardoino).