Do Kwon Claims Indifference Over Losing South Korean Passport

Do Kwon, the founder of failed stablecoin project Terra, appears to be unaware of any official arrest warrant by South Korean prosecutors and, despite the loss of his passport, he remains adamant that he isn’t trying to evade authorities. 

Yet, the crypto entrepreneur is unwilling to disclose where he actually is.

In his second interview since the Terra ecosystem’s crash, Kwon opened up about a range of matters, including what he thinks of the charges against him based on South Korea’s Capital Markets Act and how he somewhat regrets being arrogant in his tweets.

Do Kwon to lose South Korean passport, renews denial of fund freeze

The Terra founder’s South Korean passport faces the threat of invalidation as he failed to return the document to authorities. It is expected to become void in about two weeks.

But he seemed indifferent about this. “I’m not using it anyway. I can’t see how that makes a difference,” he told crypto journalist Laura Shin, without elaborating on whether he holds another passport.

He also reiterated his denial that millions of dollars in bitcoin frozen on the OKX and KuCoin exchanges belonged to him or entities he controls, saying he hadn’t used either crypto exchange for at least a year.

“I definitely don’t have any funds there,” he said, adding that he would’ve certainly noticed if the amount was as big as the amounts reported.

No individual or entity has stepped forward to claim the frozen crypto on these exchanges.

Kwon also claimed he has hired an on-chain analysis company to provide all trading data at Luna Foundation Guard, which supports the Terra ecosystem. The firm is expected to publish the information in a couple of weeks, he said.

As for the 313 bitcoins held by the Luna Foundation Guard, Kwon pointed to pending civil litigation as the reason these funds cannot be moved in the near term. But these funds are intended to eventually be distributed to compensate investor losses, as a gesture of good will.

Status of arrest warrants

Interpol has reportedly issued a “red notice” in his name — effectively, a worldwide request to law enforcement to locate and arrest Kwon for charges related to Terra’s collapse. But Kwon seemed confused about the status of this request.

“As far as I understand, it is not an international arrest warrant. And it states so specifically on its website. Every sovereign nation can interpret a red notice the way that it sees fit.” 

While technically true, the Interpol notice amounts to an international wanted persons list. Combined with the forfeiture of his passport, the status will make it difficult for Kwon to travel internationally.

Prosecutors in his home country of South Korea have said he is “obviously on the run” from authorities and refuses to cooperate. But Kwon claimed he hasn’t been living there since the end of 2021, suggesting he shouldn’t naturally be expected to return. 

He also held that cryptocurrencies are not considered securities under Korean law and so, they don’t come under the local prosecutors’ jurisdiction.

“Right now, the South Korean national legislature is in the process of devising specific regulation for cryptocurrency. So we are a little bit disappointed in the way that prosecutors are attempting to create new regulation through criminal enforcement proceedings — whereas that really should be within the job description of the legislature, or at the very least the financial regulators,” he said.

Kwon further claimed that he hasn’t seen a copy of the arrest warrants in question and isn’t aware of the specific charges he faces.

“We don’t think that any of the charges pertaining to the Capital Markets Act is applicable because the government’s stance has been that cryptocurrencies shouldn’t be governed by capital markets,” he said. “We don’t believe that those are legitimate charges, and are politically motivated.”

‘Cooperating’ with investigation, but unwilling to divulge details

During their investigation into Terraform Labs (TFL), prosecutors had blocked employees from leaving the country. The process involved a search and seizure, and Kwon was asked for supporting documents.

“I’m not at liberty to disclose what exact documents we have been producing, but we’ve been cooperating with all the document requests,” he said.

Kwon was believed to be in Singapore at the time the arrest warrants were issued. But Reuters reported local police saying he was not present in the city-state at the time. When pressed by Shin to disclose his whereabouts, Kwon chose to keep details hidden.

He explained that in the aftermath of Terra’s collapse in May, “there were lots of situations where personal security was threatened” such as reporters and others breaking into his apartment building.

“Every time the location where I live becomes known, it becomes almost impossible for me to live there,” he said.

He said he regularly meets associates and his location is therefore not a secret, but he did not want to specify even his current country.

Bloomberg reports he is in now in Dubai, citing a comment from South Korean prosecutors.

Admits regrets over smug tweets, investor losses

Kwon has faced flak for being arrogant on Twitter, once even insinuating someone was “poor.” When Shin asked him whether he felt guilty, he said he got carried away.

“I think in retrospect, I should have held myself to a sort of more stringent standard,” he said. “I do think it’s worthwhile just keeping them on there…just for record-keeping and posterity purposes.”

Kwon notes that he is not working and has no connection whatsoever to Luna Classic, and TFL is focused on the relaunched Terra.

He also apologized for causing massive losses to his project’s investors, assuming sole responsibility.

“It’s quite hard to put into words, but the scale of the financial and emotional and economic damage that happened here is not easy to live with,” he said.

This story was updated on Oct. 21 at 9:29 am ET noting a report on Do Kwon’s whereabouts.

---

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.