SEOUL – Do Kwon, whose collapsed Terraform Labs cryptocurrency ecosystem sparked a meltdown in digital assets, faces being forced to return to South Korea after officials sought to have his passport revoked.
A request has been passed to the nation’s Foreign Ministry to scrap the travel document, the prosecutor’s office said Thursday. If the ministry accedes, Kwon – who prosecutors have said is in Singapore – in theory would have to return to Seoul within 14 days after receiving the notice of revocation.
The ministry said it’s evaluating the request and earlier indicated it’s possible Kwon can stay in Singapore without a passport.
The latest steps came after a court in South Korea issued an arrest warrant for Kwon and five others on allegations that include violations of capital-markets law. Kwon couldn’t be reached for comment. A Terraform Labs spokesperson declined to comment.
Kwon found himself at the center of one of crypto’s biggest blowups when TerraUSD, also known as UST, crumbled from its dollar peg and brought down the ecosystem he had built. The $60 billion wipeout also saw the implosion of a related token known as Luna. The collapse in May shook faith in the digital-asset sector, which has yet to recover much of the losses.
Some investors in Luna have filed a complaint with local prosecutors alleging Kwon engaged in fraud and illegal fundraising, according to Han Sang Jun, a lawyer at Daegun. LKB & Partners also filed a complaint with South Korean prosecutors making similar allegations.
An estimated 280,000 South Koreans had invested in Luna, according to the Financial Services Commission, the country’s financial regulator. Kwon said in an interview with crypto media startup Coinage that he plans to cooperate with authorities when the time comes.
A police report was also filed in Singapore in May, according to The Straits Times.
Terra’s collapse and the broader market sell-off led to the implosion of Singapore-based Three Arrows Capital, the once high-flying crypto hedge fund now under liquidation, with market contagion also affecting lenders and brokers such as Voyager Digital and Celsius Network. BLOOMBERG