Terra manager arrested in South Korea

South Korean authorities have reportedly arrested Terra’s Head of General Affairs, according to local press reports.

Arrests continue in the Terra investigation

The hands of justice are being tightened around Terra after the resounding failure of its ecosystem last May, which led to a full-blown meltdown of the cryptocurrency markets and concern that the failure of Luna’s native stablecoin UST could spread to the entire stablecoin market, which has grown exponentially and serves as a kind of collateral to the entire cryptocurrency market.

The arrest of Terra’s manager comes after months of investigation by South Korean authorities that led to several charges against the company’s former CEO and founder and some of its key managers for tax evasion and money laundering. 

The arrest involved Terra’s Head of General Affairs, Yoo Mo, a close associate of CEO Do Kwon, who designed and implemented the Terra Protocol. This marks the first arrest in the ongoing Terra investigation. On Wednesday, South Korean authorities issued a judicial warrant against the individual, who was immediately stripped of his passport and remanded to prison pending trial.

Yoo is charged with market manipulation, evasion, and fraud, but most likely the arrest is also a warning to the real target of the Korean justice system, which would be precisely founder Kwon, who a few months ago sold his properties in Korea, most likely to escape the possibility of asset confiscation, which very soon the authorities may demand.

According to reports in the South Korean press that first broke the news, South Korean authorities have reportedly issued an arrest order for most of the company’s top management, including clearly Kwon, co-founder and CEO of Terraform Labs. Yoo’s arrest order is dated 14 September. In addition, prosecutors say Yoo used bot programming to artificially inflate and manipulate the market price of Terra’s cryptocurrency.

Interpol is also pursuing Do Kwon’s trail

In recent days, Korean authorities issued an order to withdraw Kwon’s passport, giving him 14 days to turn it in, under penalty of cancellation, and asked Interpol to issue an international arrest warrant after that the investigation into the collapse of Terra’s algorithmic stablecoin and the related cryptocurrency in May allegedly showed serious irregularities committed by Kwon.

As a preventive measure, South Korean prosecutors reportedly froze nearly $40 million in cryptocurrencies allegedly belonging to Terraform Labs co-founder Kwon Do-hyeong.  

Founder Kwon reportedly responded to the news via Twitter to deny that the frozen funds were his:

“I don’t understand the motivation behind spreading this falsehood: muscle flexing? But for what purpose?”

After the collapse of his ecosystem, Kwon certainly did not sit on his hands, but created a new token and project renamed Luna Classic, which after an initial slump recovered, and after the news lost more than 4%. The coin’s price dropped by 43%. Kwon has always reiterated his willingness to cooperate with the authorities, claiming that he did not commit any of the charges charged by the Korean court. He also said he is not a fugitive at all, although his current residence remains mysterious since he reportedly sold his very luxurious apartment in Singapore before the summer for more than $25 million.