S.Korea blocks ex-Terra employees from leaving country amid probe


The prosecutor’s office in Seoul on Tuesday said it banned former employees of Terraform Labs Pte. Ltd. in South Korea from leaving the country as it investigates the collapse of the company’s LUNA cryptocurrency and UST stablecoin that cost investors an estimated US$40 billion in losses.

Local media first reported the travel ban, saying it involved at least two senior former employees of Terraform Labs, but the prosecutor’s office told Forkast that many more people are involved. 

“We have placed a departure ban on a considerable number of people that we need to investigate for the Terra-LUNA case,” Choi Sung-kook, a prosecutor in the Seoul Southern District Prosecutor’s Office, told Forkast. He declined to give specifics, but said the number is less than 70. 

Choi said prosecutors wish to locate Terra’s chief executive officer Kwon Do Hyung, better known as Do Kwon, and interview him.

 “Voluntary attendance is first,” Choi told Forkast. “We cannot disclose exactly what will follow after non-compliance to summons,” he said. The office declined to comment on whether they are aware that Do Kwon is reported to be in Singapore or if they have been in touch with authorities in the city-state.  

Local TV news broadcaster JTBC and other local media reported that one former employee who helped design and develop Terraform Lab’s decentralized finance Anchor Protocol had made several accusations against Do Kwon, including manipulation of market prices. The reports did not name the employee.

Forkast has made repeated attempts over several weeks to contact Do Kwon, but he hasn’t responded to text messages and phone calls. He did not respond to a text message sent on Tuesday. 

The prosecutor told Forkast that the office is investigating allegations of fraud against Do Kwon and Terraform Labs executives. A class action lawsuit has been filed in California, alleging Terraform Labs sold unregistered securities and misled investors. 

Last week, South Korean prosecutors obtained details of a special tax audit of Terraform Labs conducted last June by Korea’s National Tax Service, which resulted in the company reportedly paying 50 billion Korean won (US$38.7 million) in unpaid taxes.

The company was not reported to the prosecutor’s office for tax evasion then, and local media say such charges are now being considered by prosecutors.

However, the Seoul Southern District Prosecutor’s Office told Forkast that it is unable to investigate Kwon on tax-related matters if the tax authorities do not press charges against him and Terraform Labs.

Meanwhile, South Korean news broadcaster YTN reported that another option for prosecutors would be to invalidate Kwon’s passport if he doesn’t cooperate with the investigation.


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