South Korea requests Interpol’s help in Terraform Labs probe

South Korea requests Interpol's help in Terraform Labs probe

South Korean authorities initially believed Kwon was in Singapore before the country’s police announced last week that he wasn’t there. Kwon, who has been accused of exaggerating the stability of his digital currencies before their collapse, insisted in a tweet on Sunday that he wasn’t on the run from any “government agency that has shown interest to communicate”.

“We are in full cooperation and we don’t have anything to hide,” Kwon said in the tweet.

The collapse of Terraform Lab’s digital currencies, TerraUSD and Luna, affected an estimated 280,000 South Korean investors while causing broader turmoil in the global cryptocurrency market.

TerraUSD was designed as a “stablecoin”. Those are pegged to stable assets like the US dollar to prevent drastic fluctuations in prices. However, around US$40 billion in market value was erased for the holders of TerraUSD and its floating sister currency, Luna, after the stablecoin plunged far below its US$1 peg in May.

South Korean prosecutors launched the investigation following collective complaints filed by dozens of investigators.

The Bank of Korea, South Korea’s central bank, said in a report published in June that the collapse of TerraUSD and Luna was a major factor in the global cryptocurrency market shrinking by more than 40 per cent compared to late 2021, when its market value reached over US$2.3 trillion.

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