Crypto Fugitive Do Kwon Is Set to Lose His South Korean Passport

Joanna Ossinger and Sangmi Cha, Bloomberg News

Do Kwon, co-founder and chief executive officer of Terraform Labs, in the company's office in Seoul, South Korea, on Thursday, April 14, 2022. Kwon is counting on the oldest cryptocurrency as a backstop for his stablecoin, which some critics liken to a ginormous Ponzi scheme. Photographer: Woohae Cho/Bloomberg , Bloomberg

(Bloomberg) -- South Korea is set to strip Terraform Labs Pte founder Do Kwon of his passport, intensifying pressure on the fallen entrepreneur to return to the nation and face charges over a $60 billion crypto crash.

The 31-year-old must hand the document back or else it will be revoked in about 14 days, according to a government notice posted on Wednesday. Kwon’s location is unclear and he is the subject of an Interpol red notice.

Kwon was behind the TerraUSD stablecoin, which was meant to have a constant $1 value in a complex arrangement with sister token Luna. The edifice fell apart in May, worsening a $2 trillion crypto rout, pushing a range of digital-asset firms toward insolvency and causing consternation at regulators globally.

He and five others have been accused of breaching South Korea’s capital-markets law. Terraform Labs has rejected the charges and said the case has become “highly politicized.”

The Chosun Ilbo newspaper reported that prosecutors in Seoul have frozen an additional 56.2 billion won ($40 million) of assets they claim are Kwon’s, bringing the total to about 95 billion won.

Kwon on Twitter said “I don’t know whose funds they’ve frozen, but good for them, hope they use it for good.” He didn’t immediately reply to an email seeking comment.

Prosecutors on Thursday confirmed a local report that one of the people accused, surnamed Yu, had been arrested on charges including violations of the capital-markets law, fraud and breach of duty related to market manipulation.

(Updates with an arrest in the Terra case in the final paragraph.)