Why are authorities chasing Terra founder Do Kwon?

Red notice for Do Kwon

Terra ecosystem’s both TerraUSD and Luna crashed in May 2022. Interpol has issued an arrest warrant for the creator of the Terra blockchain, Do Kwon. According to prosecutors, he faces charges for a failed DeFi project in South Korea. The South Korean police claim that Do Kwon is on the run and has fled to Singapore. The police of South Korea clearly declared they are dedicated to locating and arresting digital entrepreneur Do Kwon. The prosecutors reported he is on the run along with some of Terra network's employees. 

But the CEO of Terra network Do Kwon asserts the very opposite. He is still in contact with his followers on Twitter. He tweeted that he is making zero effort to hide. He further said'' I go on walks and malls, no way none of CT has run into me the past couple of weeks. “Do Kwon asserts South Korean authorities have not contacted him. He also denies that there is an arrest warrant out for him.

According to Terraform Labs Pte. Ltd., Do Kwon's basic human rights are being violated by South Korean prosecutors. Terra network urged the prosecutors to drop the arrest warrant. He has dissolved his office there, according to South Korean prosecutors. Among all this the Terra founder is found tweeting this:

https://twitter.com/stablekwon/status/1478192466629369859?s=20&t=sQJbEuuYS_PPxBibCv6mdQ

Along with the arrest order, South Korean prosecutors requested his passport be canceled by the Korean foreign affairs ministry and that the International Criminal Police Organization issue a "Red Notice”. The notification requests that law enforcement find and temporarily detain Kwon in any of the 195 member nations. Do Kwon has left Singapore, according to the Singapore police. However, Singapore police have promised to make every effort to assist in the capture of Do Kwon. Da Kwon, however, asserts that he is ready to talk to agencies on his Twitter account.

In another tweet, Do Kwon said “We are in the process of defending ourselves in multiple jurisdictions,” he added, “We have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months.”

Does Kwon intend to return to Korea?

The co-founder of Terra Labs, Coinage, in an interview, asked Do Kwon when he is coming back to Korea to which he replied “It’s kind of hard to make that decision because we’ve never been in touch with the investigators. They’ve never charged us with anything”. Authorities have searched the place of Terra network co-founder Daniel Shin in order to investigate illegal activities that led to the crashing of the Terra network.

Every member of the Terra network is forbidden from leaving South Korea by the prosecution. The search for Do Kwon continues on a global scale.

In the cryptocurrency market, there are still seven trillion Luna tokens available. It has a 1.2% tax on it to cover project losses. The network is allegedly going backward, and Terra Labs claims to burn it.

In an interview with WSJ, Terra's spokesperson refused to give the exact location of Do Kwon. He says it is for the safety of terra founder and his family, as there have been multiple break-in attempts at his house.

The fall of Terra Luna was one of the most tragic in crypto history. This has never happened before except the rug pull activities.

Terra Luna fall

An angry investor who lost $2.3 million in the crash of a Terra network broke into a Do Kwon house in South Korea. The investor demanded Do Kwon accept full responsibility for the crash of the crypto world.  The man got fined one million Korean won. After this incident, Kwon’s wife requested protection from the police.

Crash of Do Kwon’s Terra network

The official launch of Terra Network took place in July 2019. Terra was included in the supposedly top 10 cryptocurrencies in terms of market value.  In the Terra network, the price of Luna tokens fluctuated by up to 100% between January and March 2022. Terra has shown growth since November 2021. Only in March 2022 did TerraUST's market grow to 2 million.

It was classified as a stable coin on August 3, 2022, by crypto experts. Raynor de Best, a finance expert, said Terra is less volatile because of its usefulness in decentralized finance. Cryptocurrencies have a jumpy and erratic nature.

Many people steer clear of cryptocurrencies due to their volatility and omnipresent risk of collapse. However, many other people also suffer financial losses. More people are now avoiding the digital market because they have witnessed its collapse in front of their eyes. The risks associated with investing in cryptocurrencies are tremendous.

Consider reports the algorithmic stable coin UST from Terra had a dramatic collapse in value in May 2022, plunging by more than 95% in a couple of days. Despite the unpredictability of cryptocurrencies, this was a huge shock. The collapse of Terra stable coin raised a huge warning flag for the whole cryptocurrency market.

The victims are demanding Do Kwon’s passport be revoked. The prosecutors say obviously Kwon is on the run and has no intention to appear before them for questioning.

Why did Do Kwon’s technique fail?

The victims are asking for Do Kwon's passport to be revoked. He is plainly evading capture and has no desire to hand himself up for questioning, according to the prosecution.

The Terra network was created to stabilize the cryptocurrency market. Its objective was to keep the value constant over time. Stable cryptocurrency assets are backed by reliable reserves like dollars or gold. Terra, however, was not protected by any other resource. Its stability was dependent on LUNA, its sibling cryptocurrency, and its algorithms. Terra naturally followed the path of the value of luna when it began to decline.

The Crypto market somehow managed to get through this financial catastrophe by the end of May. But this financial crisis decreased the value of numerous cryptocurrencies. Do Kwon claimed to increase the stability and reduce the volatility of cryptocurrency. He created Terra, a two-token system that quickly dropped by 99 percent. His approach was questioned by many well-known economists.

We now know that the predictions made about the cryptocurrency Terra by British economist Frances Coppola in July were accurate. She tweeted that the self-correcting mechanism- the type used by TeraUSD, also known as UST- will fail when investors are stampeding out.   

In this tweet, Do Kwon mocked the British economist for her poverty. The Terra developer brutally replied: “I don't argue with the poor on Twitter, and I am sorry I don't have a chance for them at this time.”

After that exchange, Francis Cappola reportedly blocked the South Korean currency developer on Twitter.

On 9 May Do Kwon tweeted “Anon, you can hear influencers whistling about UST de-pegging for the 69th time. Or you can remember they are all poor now, and go for a run instead.”

https://twitter.com/stablekwon/status/1506408804333744129?s=20&t=t-r2GRAeenjSCBlj4Th2YA

Kwon made fun of his critics by referring to them as "poor" and "cockroaches". A few days prior to Terra's destruction, its creator was busy degrading others. The price of Terra suddenly dropped from $1 to $0.3 on May 9, 2022.  Do Kwon has been charged with fraud and unauthorized deposit-taking.

Conclusion

The decline in Terra value started in May 2022 and left the whole market stunned. Within days, its value started dropping by 50% with each passing day. In no time, it lost its value causing a major setback in the crypto world.