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 being “on the run” in a message posted to his Twitter account.
The international cat-and-mouse lawsuit comes amid yet another crash in the industry’s value, apparently driven by the ‘merger’, an unprecedented change to the technical infrastructure that underpins Ethereum, the world’s second-largest cryptocurrency.
Kwon was the founder of the Terra/Luna cryptocurrency platform, an attempt to build a system that could rival Ethereum at scale. But Kwon’s attempts to build an “algorithmic stablecoin” that would hold its value at exactly $1 without any underlying reserves failed catastrophically in the spring of 2022, wiping out more than $80bn (£70bn) of value as tokens were sold off by panicked holders, and triggering a broader crypto crash that destroyed two-thirds of the value of the entire sector.
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A charismatic singer, Kwon was widely known for his verbal exchanges on social media with people who questioned the sustainability of his creation, even in his final days. After reports this month that South Korean prosecutors were seeking his arrest, Kwon, who was apparently based in Singapore at the time, tweeted: “I’m not ‘on the run’ or anything. similar – for any government agency that has expressed an interest in communicating, we are in full cooperation and have nothing to hide.
Now South Korean prosecutors say they cannot contact Kwon, who has not tweeted since Friday. “We have started the procedure to place him on Interpol’s red notice list and revoke his passport,” the prosecution told the Financial Times on Monday, as he is “obviously on the run and has no intention of appear before us for questioning”. ”.
They said he dissolved 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 would help with the investigation. Kwon did not respond to a Guardian request for comment.
In June, former Kwon employees reported having their passports seized by the state to prevent them from following him, as part of the government investigation into his company’s bankruptcy.
Kwon’s apparent leak comes amid another slump in cryptocurrency markets, with bitcoin down almost 16% in a week and ethereum down almost a quarter. The rout was apparently caused by the Ethereum “merger”, which saw the cryptocurrency move from “proof of work” to “proof of stake”, a much less energy-intensive way of operating the infrastructure under underlying a large part of the sector.
The switchover was a success on its own, with the network seamlessly switching from one protocol to another. As a result, direct power consumption by the Ethereum network dropped by 99.98%.
Decentralized ‘miners’ who leverage the physical infrastructure required to secure ‘proof-of-work’ systems have the ability to move to other networks, but none offer the profit potential: a miner with a High-end “form” could 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 are cracking their rigs and selling the high-powered graphics cards they run on. An Nvidia GeForce RTX 3080, which once sold for over £1,000 thanks to supply shortages and demand from crypto miners, can now be had on eBay for half that.
But the move to a “proof-of-stake” system has opened up new questions about the regulatory status of cryptocurrency. The head of the Securities and Exchange Commission told the Wall Street Journal on Thursday that the change could result in the regulation of Ethereum as a security because it could pass the “Howey test,” a key legal hurdle for 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,” said SEC Chairman Gary Gensler. His comments caused an immediate 5% drop in the price of Ethereum.
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South Korea Asks Interpol To Prevent Terra Founder From Fleeing Extradition | Company – Tech Tribune France
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