Terraform Labs says Korean prosecutors are overreaching authority

Terraform Labs co-founder Do Kwon [JOONGANG PHOTO]

Terraform Labs is arguing the investigation into the failed Terra coins has become highly politicized and that prosecutors are overreaching their authority.

“We believe that this case has become highly politicized, and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law,” a spokesperson for Terraform Labs told the Wall Street Journal in a statement Wednesday.

The spokesperson for Terraform Labs, a company behind TerraUSD and Luna, said Luna wasn’t legally a security, so it isn’t covered by Korea’s capital-markets law, according to the report.

The statement comes after the Seoul Southern District Prosecutors’ Office said it had obtained an arrest warrant for Terraform Labs co-founder Do Kwon earlier this month.

Interpol also issued a red notice for Kwon’s arrest, according to prosecutors Monday. They said Kwon is not cooperating with the investigation of the collapse of Terra coins and that he may have been on the run when he went to Singapore in April right before the crash.

Almost the entire value of TerraUSD and Luna was wiped out in May, causing a $40 billion crash.

Kwon’s whereabouts are unknown after Singapore’s government said that he is no longer in the country earlier this month.

Kwon maintains that he is not “on the run” and “making zero effort to hide.” Terraform Labs declined to comment on Kwon’s current whereabouts, said the report from the Wall Street Journal.

Kwon also said he is cooperating with the investigation. “What has been probably the most surprising in all this is the amount of misinformation that gets spread,” Kwon argued on Twitter Wednesday.

Korean financial authorities blamed the Luna Terra incident for accelerating the decline of the crypto market this year, citing investors’ loss of faith in virtual assets.

BY JIN MIN-JI [jin.minji@joongang.co.kr]