South Korea seeks to revoke passport of Terra founder Do Kwon, who is said to be in S'pore

If South Korea's Foreign Ministry accedes, entrepreneur Do Kwon would have to return to Seoul within 14 days. PHOTO: BLOOMBERG

SEOUL - South Korean entrepreneur Do Kwon, whose collapsed Terraform Labs cryptocurrency ecosystem sparked a meltdown in digital assets, faces being forced to return to South Korea after officials there sought to have his passport revoked.

A request has been passed to the nation's Foreign Ministry to scrap the travel document, the prosecutor's office said on Thursday. If the ministry accedes, Kwon - who prosecutors have said is in Singapore - in theory would have to return to Seoul within 14 days after receiving the notice of revocation.

The ministry said it is evaluating the request and earlier indicated it is possible that Kwon can stay in Singapore without a passport.

The latest steps came after a court in South Korea issued an arrest warrant for Kwon and five others on allegations that include violations of capital markets law. Kwon could not be reached for comment. A Terraform Labs spokesman declined to comment.

Kwon found himself at the centre of one of crypto's biggest blow-ups when TerraUSD, also known as UST, crumbled from its dollar peg and brought down the ecosystem he had built. The US$60 billion (S$84.5 billion) wipe-out also saw the implosion of a related token known as Luna. The collapse in May shook faith in the digital asset sector, which has yet to recover much of the losses.

Some investors in Luna have filed a complaint with local prosecutors alleging that Kwon engaged in fraud and illegal fund-raising, according to lawyer Han Sang-jun at Daegun. LKB & Partners also filed a complaint with South Korean prosecutors making similar allegations.

An estimated 280,000 South Koreans had invested in Luna, according to the Financial Services Commission, the country's financial regulator. Kwon said in an interview with crypto media start-up Coinage that he plans to cooperate with the authorities when the time comes.

A police report was also filed in Singapore in May, according to The Straits Times.

Terra's collapse and the broader market sell-off led to the implosion of Singapore-based Three Arrows Capital, the once high-flying crypto hedge fund now under liquidation, with market contagion also affecting lenders and brokers such as Voyager Digital and Celsius Network. BLOOMBERG

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