(Bloomberg) -- South Korean prosecutors confirmed that they would require Do Kwon, the founder of cryptocurrency startup Terraform Labs, to notify authorities when he returns to the country, as they investigate allegations of illegal activity behind the collapsed stablecoin TerraUSD.  

DongA Ilbo earlier reported that the Ministry of Justice had approved prosecutors’ requests that Kwon be required to notify authorities upon entering South Korea. Authorities also banned Kwon’s co-founder Daniel Shin from leaving the country, the report said, citing unidentified sources.

“The report is not wrong,” the Southern District Prosecutors Office said via a text message. It did not elaborate, and it was unclear what authorities planned to do when Kwon returns. 

Kwon, who is widely believed to be in Singapore, was unavailable for comment, while the justice ministry declined to confirm the report. 

South Korea’s prosecutors have conducted raids on 15 areas, including crypto exchanges and Shin’s home. Authorities banned current and former employees of Terraform Labs from leaving the country in June, while a KBS TV report said prosecutors summoned a former official at the company’s unit for questioning.

Some investors filed a complaint with South Korean prosecutors in May, alleging Kwon and his company had committed fraud and engaged in illicit fundraising. Prosecutors are also looking into whether Kwon evaded taxes by moving profits from cryptocurrency transactions to an offshore account, local news agency Yonhap reported. 

Policymakers around the world have focused on stablecoins following the turmoil in the crypto markets, most notably the collapse of the TerraUSD token in May. 

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