Do Kwon Dogged by Fraud Allegations in South Korea

Korean prosecutors have requested a “notification upon arrival” for Do Kwon, who is believed to be in Singapore

article-image

Blockworks Exclusive Art by Axel Rangel

share
  • Terraform’s co-founder and former vice president have been issued travel ban notices
  • Co-founder Shin Hyun-seung’s residence was raided by prosecutors last week

Do Kwon, the now-infamous founder of the TerraUSD and Luna cryptocurrencies, along with his associates, are faced with escalating scrutiny from Korean prosecutors over their travel in and out of the country.

A crime investigation team looking into fraud allegations against Terraform Labs has requested the Ministry of Justice to mandate a “notification upon arrival” for Do Kwon’s entry into the country, local outlet Dong-A Ilbo reported Wednesday. Such a measure is taken to alert the investigative team to the entry of an individual.

Do Kwon is believed to be living in Singapore, but prosecutors haven’t publicly revealed details of their findings into his whereabouts. 

The Seoul Southern District Prosecutor’s Joint Financial and Securities Crime Investigation Team also issued a travel ban notice against Terraform’s co-founder Shin Hyun-seong and former Vice President Kim Mo, the report said. Shin’s residence was reportedly raided by prosecutors last week.

The move follows an extensive investigation into Terraform Labs, whose algorithmic stablecoin TerraUSD’s (UST) collapse wiped off $40 billion of investors’ wealth. The investigation began in May after UST dramatically lost its peg to the US dollar. UST and Luna’s prices plunged by 91% and 99.7% respectively between May 7 and May 12, and never recouped losses.

“There were no bugs in Terra Luna,” Kyle Downey, CEO of Cloudwall, said in a webinar on Tuesday.

“This was an economic or an incentive design issue, rather than necessarily a technical issue.”

Last month, key Terraform developers were blocked from leaving the country in order to allow for an orderly investigation. More recently, seven other crypto exchanges in Korea were under investigation for alleged links to Terraform. Transaction records and other documents were seized from the offices of Upbit, Bithumb and Coinone on July 20.

Terraform, Do Kwon and a string of other firms including Three Arrows Capital are facing a class-action lawsuit in the US that accuses them of leading retail investors to purchase Terra tokens at “inflated” prices.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Flashnote Template (41).png

Research

We believe that few tokens at the application layer are diverging more from fundamentals than ZORA. Its fully-diluted P/S sits at 90x, pricing significant growth despite a consistent decline in weekly revenues since late July. We foresee an 80% decrease in protocol net margins due to a recent update to the fee structure that reduces trading fees from 3% to 1%, while boosting creators’ portion of the fee split. ZORA’s supply overhang also represents a near-term headwind, with 45% of ZORA’s supply (4.5B tokens or $350M at current prices) earmarked for the team & investors beginning to unlock on October 23, 2025 (36-month linear vesting schedule).

article-image

Insiders have the best information — markets should be willing to pay for it

article-image

The CFTC-regulated exchange is opening doors to crypto builders and traders through grants, partnerships, and new deposit options

by Blockworks /
article-image

DFS tells banking organizations to integrate blockchain monitoring tools to curb money laundering and sanctions risks

by Blockworks /
article-image

New short and long-term priorities include L1 gas boosts, ZK-EVMs, privacy reads, and a lean, quantum-resistant Ethereum

by Blockworks /
article-image

The new stBTC token redistributes Bitcoin gas fees to users, creating liquid yield without inflation or lockups

by Blockworks /
article-image

The reserve will collect protocol revenues to back W token, alongside new yield and unlock schedule

by Blockworks /