No project in the world that reached the same heights as Terra Classic (LUNC-USD) has been so quickly turned on by investors. In one fell swoop, the project went from a serious Ethereum (ETH-USD) contender to a highly controversial failure. The creation of a 2.0 Terra (LUNA-USD) network isn’t proving satisfactory to the network’s mainstay users, either. Now, the founder of the Terra (LUNA) crypto network, Do Kwon, is facing warrants in his home state of South Korea.
The story of the summer for crypto has been the market’s spectacular crash. The global market capitalization of the industry fell below $1 trillion once again, and top players like Bitcoin (BTC-USD) shaved off tens of thousands of dollars in value. Terra was a major story through all of this. Indeed, investors may not be talking enough about the project’s vital role in the toppling of the rest of the market.
Terra didn’t just collapse spectacularly. It brought everybody down with it. It was the de-pegging of the TerraClassicUSD (USTC-USD) stablecoin that led to LUNC plummeting in value. Given its status as a top 10 crypto, many investing institutions had incredibly deep holdings of LUNC. This led to many of these investing companies to miss margin calls and fall into hefty levels of debt. From there, the rest is history: coins plummeted in sympathy, some other stablecoins lost their own pegs, and investor trust has been turned on its head.
Throughout this whole fiasco, multiple parties have been questioning the Terra leadership. Both investors and regulators want to get to the bottom of the project’s failure. More importantly, they want to know what the project’s founder, Do Kwon, might be hiding.
Terra (LUNA) Crypto Founder Do Kwon Sought by Korean Authorities
The Terra crypto team has seen plenty of controversy beyond the obvious network collapse. Stories are cropping up around the web about withheld information and new investigations from regulators. This is all culminating today with an arrest warrant for founder Do Kwon.
In the days following USTC’s un-pegging and the drop in LUNA prices, word got around that Do Kwon was previously behind another failed stablecoin venture. Operating on the same exact mechanics as USTC, the project never even got off the ground. It was unable to achieve its $1 level, and Do Kwon held this information from Terra investors.
Another bout of controversy came after the developers released a hard fork proposal. Preliminary discussion showed that the community was vehemently opposed to the idea. Though, it still passed with 65% of the vote. The investigation alleges that Do Kwon manipulated the vote with his own crypto, which he had been hiding from Terra users.
South Korean regulators and the U.S. Securities and Exchange Commission (SEC) are both getting on Do Kwon’s case with investigations. Regulators in Korea are aggressively raiding companies that do business with Terra, as well as the house of network co-founder Daniel Shin.
And now, this investigation is culminating with a warrant for Do Kwon’s arrest. Authorities in South Korea are looking for Kwon under accusation of fraud and illegal fundraising. Warrants for five other individuals are also active. Kwon asserts that he is not guilty on these charges. He adds that he has lost a significant amount of his own wealth through Terra’s collapse.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.