Luna Founder Do Kwon Faces Passport Ban After Crypto Collapse

South Korean authorities are seeking the arrest of Do Kwon, co-founder and chief executive officer of Terraform Labs. His company is behind the now-collapsed cryptocurrencies TerraUSD and Luna. South Korean prosecutors are now trying to freeze bitcoins linked to kwon.

Woohae Cho | Bloomberg | Getty Images

South Korean authorities on Thursday began revoking the passport of Terraform Labs founder Do Kwon, whose company was behind a dramatic $60 billion cryptocurrency collapse.

Police also arrested one person in connection with Kwon’s operations.

Kwon has been instructed by South Korea’s foreign ministry to return his passport by October 19 or the document could be annulled.

The saga between Kwon and South Korean authorities continues to deepen after the collapse of terraUSD and Luna wiped billions from the cryptocurrency market and sent shockwaves through the industry. Terraform Labs, Kwon’s company, was behind these two digital coins.

South Korean authorities wanted to arrest Kwon last month, claiming he was on the run. Prosecutors said Interpol, the global police organization, issued a “red notice” for Kwon. Such notices are issued to fugitives who are wanted either for prosecution or to serve a sentence.

However, Kwon insists that he is not on the run. His whereabouts are still unknown.

Seoul’s southern district prosecutor’s office prosecuting Kwon has charged the founder and five others with capital market law violations and fraud. On Thursday, the bureau confirmed to CNBC that it had arrested one of the wanted people, surnamed Yu.

No arrest warrant has been issued yet. However, authorities may arrest someone based on concerns that person may be feeling. An arrest warrant must be issued or the person released within 48 hours of the arrest.

South Korean prosecutors have also ordered KuCoin and OKX, two cryptocurrency exchanges, to freeze more than $60 million in bitcoins tied to kwon.

On Wednesday, local media reported that prosecutors froze another 56.2 billion South Korean won ($39.9 million) in Kwon digital assets.

However, the crypto founder refuted these claims on Twitter. Kwon said no funds were frozen.

The Seoul South District Prosecutor’s Office declined to comment on the report of the frozen funds.