Longtime Critic FatMan Hails Law Enforcement Action As Victory For Crypto Space

Do Kwon, the co-founder and CEO of Terraform Labs, the company behind the $50B Terra ecosystem that blew up last year, has been arrested in Montenegro, a local government official confirmed to The Defiant. 

Kwon has been charged with document forgery, according to an official tweet. According to local media, Kwon was in possession of falsified travel documents from Costa Rica and Belgium. 

About to board a flight to Dubai, he was arrested with another person, identified as Hon Chang Joon. Three laptops and five mobile phones were also taken from them. 

Kwon has an outstanding arrest warrant in his home country, South Korea.

Interpol, the international police network, issued a “red notice” for Kwon in September at the behest of South Korean authorities. A red notice is a request to global law enforcement agencies to arrest a person for a given crime. 

The Securities and Exchange Commission (SEC) also charged Kwon with securities fraud in February. Singapore opened a probe into Terraform Labs earlier this month. 

The pseudonymous FatMan, who rose to prominence over the past year cataloguing what he says are Kwon’s many crimes, sees the arrest as a boon for the digital asset industry. 

“What happened today sends a strong message to those looking to harm the crypto space: there are real-life consequences for scamming people online, even for the rich and powerful,” he told The Defiant.

UST Collapse

Kwon was the first of many titans of the crypto world to see their empires crumble in 2022. 

After the UST stablecoin, a key component of the Terra ecosystem, collapsed along with its sister token LUNA — he was broadly smeared on social media in the wake of the tens of billions of dollars that went up in smoke as the mechanisms underpinning UST and LUNA turned out to be anything but solid. 

There have been attempts to repair the project’s image — a report commissioned by Terraform Labs claimed that the Luna Foundation Guard spent $4.3B to defend the stablecoin’s peg to a U.S. dollar during its collapse. 

And Kwon has always been a combative figure. His company filed a flippant lawsuit against the SEC in October 2021. He also famously called for the demise of the DAI stablecoin just under a year ago. 

Fatman thinks the case should progress in a straightforward way from here. “In terms of resolution, it’s pretty simple: Terraform Labs should be treated as any company would.”

To him, this means addressing Terraform Labs’ creditors, including UST holders, who he says were victims of fraud. 

“Because it’s all crypto, they’ve managed to keep every penny for themselves without refunding a dime despite promising to,” he said. “Now, law enforcement needs to step in and claw everything back, and civil court actions will need to happen as well.”