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The co-founder of Singapore-based crypto fintech firm Terraform Labs was detained in Montenegro yesterday (Mar. 23). Carry out Kwon was wanted by the South Korean police, the US Securities and Exchange Commission (SEC), and Interpol—the latter issued a crimson take a look at up on for his arrest last September.
Montenegrin Internal Affairs minister Filip Adžić first shared information of Kwon’s arrest in a Facebook put up. Adžić said Kwon was detained at Podgorica airport, and his official identification was being verified. Kwon’s identification was confirmed thru a fingerprint match, Interpol’s national central bureau in Seoul suggested CNN today (Mar. 24).
Kwon had attracted regulatory attention properly earlier than the May 2022 crash of his company’s paired cryptocurrencies—stablecoin TerraUSD and sister coin Luna. Their collapse precipitated authorities to snarl arrest warrants, however by then, Kwon had long gone beneath the radar.
A transient timeline of the hunt for Carry out Kwon
September 2021: The US Securities and Exchange Commission subpoenas Carry out Kwon at a Unusual York convention with considerations that Replicate Protocol—a decentralized finance (DeFi) platform constructed on Terra that enables users to exchange synthetic versions of shares, like Tesla and Apple—may violate federal securities law.
November 2021: SEC information for a subpoena enforcement action in search of to require Terraform Labs and Kwon to conform with subpoenas for paperwork and testimony related to Replicate.
January 2022: Terra turns into the arena’s 2d-largest DeFi ecosystem late Ethereum, with over $18 billion in total value locked.
June 2022: A identify orders Kwon and Terraform to conform with the SEC subpoena.
Nov 2021: Carry out Kwon ideas out the chance that UST/LUNA is vulnerable to a “Black Wednesday” tournament—the September 1992 tournament when speculators like George Soros shorted the British pound.
May 2022: terraUSD depegged from the US dollar, and the associated payment of it and its sister token LUNA nosedives to cessation to zero. Within the aftermath, retail traders lose tens of billions of dollars.
September 2022: South Korea disorders an arrest warrant against six individuals, including Carry out Kwon. The Interpol disorders a crimson take a look at up on— a inquire to law enforcement worldwide to locate and provisionally arrest a person pending extradition, quit, or similar legal action.
February 2023: The SEC charges Terraform Labs and Carry out Kwon with orchestrating a multi-billion dollar crypto asset securities fraud between April 2018 and May 2022. “[T]he Terraform ecosystem was neither decentralized, nor finance. It was simply a fraud propped up by a so-called algorithmic “stablecoin”—the associated payment of which was controlled by the defendants, no longer any code,” Gurbir S. Grewal, director of the SEC’s division of enforcement, said.
March 2023: The US justice department probes the crypto coins’ crash. According to the lawsuit, Kwon is being charged with conspiracy to defraud, commodities fraud, securities fraud, wire fraud, and conspiracy to engage in market manipulation.
Quotable: The Terraform scam
“I am no longer ‘on the flee’ or anything similar—for any executive agency that has proven curiosity to communicate, we are in elephantine cooperation and we don’t have anything to mask” —Carry out Kwon’s statement in a Sept. 17, 2022 tweet
The crypto crash caused by Carry out Kwon’s trade, by the digits
$40 billion: The minimal loss caused by the crash of the firm’s cryptocurrency
$300 billion: The total loss in the crypto market after terraUSD and Luna’s collapse triggers a sell-off across bitcoin and other major cryptocurrencies
88 million: LUNA, price $3 billion, that Kwon personally acquired into a wallet he controls. After backlash from the Terra’s neighborhood, he said “stealing $3 billion will not be any longer the game theoretic optimal point for me, so I will not be any longer going to.”
$11 billion: How considerable Carry out Kwon bet LUNA’s label won’t tumble beneath $88 by next year in March 2022—$1 billion against crypto trader Algod and $10 billion against a twitter person with the username Gigantic Rebirth. He detached owes them.
Where will Carry out Kwon high-tail next?
Seoul is in search of extradition, and so is Washington.
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