South Korea asks Interpol to stop Terra founder from fleeing extradition | Company

South Korean authorities have asked Interpol for a red notice to prevent crypto entrepreneur Do Kwon from fleeing extradition, days after the Terra founder denied in a message on his Twitter account that he was “on the run.” the flight”.

The international cat-and-mouse chase comes amid another collapse in the sector’s value, apparently prompted by the “merger,” an unprecedented change in the technical infrastructure underlying ethereum, the second-largest cryptocurrency.

Kwon was the founder of the Terra/Luna cryptocurrency platform, an effort to build a system that could rival ethereum in scale. But Kwon’s attempts to build an “algorithmic stablecoin” that would maintain its value at exactly $1 without any reserves behind it failed catastrophically in the spring of 2022, costing more than $80 billion (£70). billion) of value was wiped out as the tokens were sold by panicked holders, causing a wider crypto crash that wiped out two-thirds of the entire industry’s value.

A charismatic frontman, Kwon was widely known for his verbal sparring on social media with people questioning the permanence of his creation, even in his final days. After reports this month that South Korean prosecutors wanted to arrest him, Kwon, who was apparently based in Singapore at the time, tweeted: “I am not ‘on the run’ or anything like that – to any government agency that has expressed an interest in communicating, we are fully cooperating and have nothing to hide.”

Now South Korean prosecutors say they cannot contact Kwon, who has not tweeted since Friday. “We have started the process to put him on the Interpol red list and have his passport revoked,” the prosecutor’s office told the Financial Times on Monday, as he is “clearly on the run and has no intention of working for us.” appear for questioning”.

They said he disbanded the South Korean branch of his company, Terraform Labs, and traveled to Singapore in late April. Singapore police said Kwon was no longer in the country but they would assist with the investigation. Kwon did not respond to a request for comment from the Guardian.

In June, former Kwon employees reported that their passports had been seized by the state to prevent them from tracking him, as part of the government’s investigation into the failure of his company.

Kwon’s apparent flight comes amid another collapse in the cryptocurrency markets, with bitcoin falling nearly 16% in a week and ethereum falling nearly a quarter. The defeat was apparently prompted by the ethereal “merger,” with the cryptocurrency moving from “proof of work” to “proof of stake,” a much less energy-intensive way to manage the underlying infrastructure of much of the industry.

The switch was successful on its own terms, with the network switching flawlessly from one protocol to another. As a result, the direct energy consumption by the ethereum network has decreased by 99.98%.

The decentralized “miners” who manage the physical infrastructure needed to secure “proof of work” systems have the ability to switch to other networks, but none offer close to the profit potential: a miner with a high-quality “rig” would expect to earn $50 a day on ethereum until the merger, but will only earn pennies on other networks after the merger.

As a result, miners tear down their installations and sell the powerful graphics cards they run on. An Nvidia GeForce RTX 3080, which once sold for more than £1,000 due to shortages in supply and demand from cryptominers, can now be bought for half that on eBay.

But the shift to a “proof of stake” system has raised new questions about the cryptocurrency’s legal status. The head of the Securities and Exchange Commission told the Wall Street Journal on Thursday that the shift could see ethereum regulated as a security because it could pass the “Howey test,” a major legal barrier to how tradable assets are regulated in the US.

In a proof-of-stake system, “the investing public anticipates profits based on the efforts of others,” SEC chairman Gary Gensler said. His comments led to an immediate 5% drop in the price of ethereum.

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