South Korea tightens circle on Do Kwon, arrests his aide

Terraform Labs founder Do Kwon‘s aide, Yoo Mo, has been arrested by South Korean officials for fraud and market manipulation. At the same time, the country’s Ministry of Foreign Affairs gave Kwon 14 days to return his passport, according to local news reports.

Yoo Mo was arrested on Oct. 6. He was the Head of General Affairs at Terraform Labs and is considered a key aide of Kwon.

Mo is the first individual arrested in the ongoing Terraform Labs investigation.

The Ministry of Foreign Affairs issued the latest warrant on Oct. 5 and requested Kwon to return his passport to a passport office or diplomatic mission abroad. The warrant states that if Kwon fails to do so, the Ministry will invalidate Kwon’s passport in accordance with article 13 of the passport act.

Yoo Mo’s arrest

The Seoul Southern District Prosecutor’s Office’s Financial and Securities Crime Unit released an arrest warrant for Mo on Oct. 5.  One day later, on Oct. 6, Mo was arrested in South Korea, where he was living in hiding.

South Korean authorities claim that Mo “faked” a market by deceiving the community as if coin transactions were actively taking place. He also used bots to inflate prices to make it look like the active trading volume was high.

Mo’s name was in the initial arrest warrant for Do Kwon, which includes four other people besides  Kwon and Mo.

Updates on the case

The Terra-Luna case started soon after the TerraUSD (USTC) lost its peg in early May and led to the collapse of the Terra (LUNA) ecosystem. This collapse also initiated the coldest winter in crypto history.

The collapse became a legal dispute after Kwon was accused of withdrawing $80 million per month from the Terra project, which added to nearly $2.7 billion.

South Korea has been on the case since day one and has been requesting Kwon’s return and collaboration with the investigation. Kwon, on the other hand, while denying being on the run, hasn’t made any attempts to succumb to Korea’s requests. Instead, he lawyered up.

After Korea asked for Interpol’s help in searching for Kwon, Interpol released a red warrant on Sept. 26, obligating law enforcement worldwide to locate and arrest Kwon. Terraform Labs acknowledged the arrest warrant as “unfair” while not disclosing Kwon’s location.

On Oct. 5, South Korean officials detected and froze $39.66 million that belonged to Kwon, which was held in two exchanges, KuCoin and OKX. Kwon responded by saying he doesn’t use the exchanges as he doesn’t have time to trade and blamed South Korean authorities for using his money to get rid of the opposition party.