A person suspected of being Do Kwon, the creator of the failed stablecoin TerraUSD, has been arrested in Montenegro. The suspect was detained in the airport of the country’s capital with false documents. The local authorities are waiting for confirmation of the suspect’s identity. TerraUSD aimed to maintain a price of $1 but lost its dollar peg in May of last year, causing a chain reaction that wiped out $40 billion in value from the digital currency markets. South Korean authorities issued a warrant for Kwon’s arrest in September.
Also Read: US SEC Charges Terra CEO for Multibillion-Dollar Crypto Fraud
Investigations and Lawsuits
The US Justice Department is investigating the collapse of TerraUSD and has questioned former Terraform Labs team members. In addition, the Securities and Exchange Commission has sued Kwon and the company for alleged securities fraud related to the TerraUSD collapse. Police in Singapore are also investigating Terraform Labs, where the company is based.
Kwon’s Denial of Fraud
A lawyer for Kwon and Terraform has said in court that they would seek to dismiss the SEC’s lawsuit. Kwon has denied committing fraud. According to South Korean prosecutors, Kwon left Singapore in September and traveled to Dubai and then to Serbia before his recent arrest in Montenegro.
The collapse of TerraUSD highlights the potential dangers of investing in untested and unproven stablecoins. As the digital asset market continues to grow, regulators around the world are taking a closer look at stablecoins and other crypto assets to ensure that investors are protected.
