After Months of Uncertainty, South Korean Police Arrest First Suspect in Terra

JAKARTA - After months of investigation without a single arrest and until now the main culprit is still on the run and even continues to tease law enforcement via Twitter, South Korean police have finally arrested the first person involved in the collapse of the Terra blockchain ecosystem.

News of the arrest of Yoo Mo, head of Terraform Labs' business team, surfaced in Korean media on October 6. Later, the district attorney, Choi Sung-kook, confirmed the information to Forkast.

The Seoul Southern District Prosecutors' Office issued a subpoena for Yoo on October 5. They reportedly accused him of violating the Capital Markets Act and fraud by manipulating the market price of stablecoin TerraUSD (UST), now known as TerraUSD Classic (USTC). Authorities did not disclose details of the arrest.

An arrest warrant for Yoo was issued back in September, and the executive is believed to be part of the inner circle of Terra co-founder Do Kwon. On September 26, Interpol issued a Red Notice, which is a request to law enforcement agencies worldwide to find and arrest and extradite, surrender, or similar legal action” for Do Kwon.

Meanwhile, a spokesperson for Terraform Labs claimed the South Korean case against the company's top management had become political and alleged that prosecutors expanded the definition of security in response to public pressure. The collapse of the $40 billion Terra ecosystem in May 2022 led to a crypto market rout that wiped nearly a trillion dollars from the crypto market.

Currently, the country's capital market and electronic securities regulations do not include a legal definition of non-standard securities issued via blockchain. The country is moving to regulate space with its financial regulator, the Financial Services Commission, setting up guidelines for security tokens by the end of 2022.