- Red Notice Monitor
South Korea File Interpol Red Notice Against Crypto Boss and Revoke His Passport After $2b Crash
Updated: Oct 28, 2022
South Korea announce that Interpol has issued a Red Notice against Do Kwon, the co-founder of Terraform Labs. South Korean authorities believe Do Kwon is hiding out in Singapore and are seeking his arrest and extradition.
Photo: André François McKenzie via Unsplash
In May this year, Kwon’s crypto currencies “Luna” and “TerraUSD” collapsed with an estimated $60 billion crash in the crypto market. South Korea issued an arrest warrant for Kwon, a South Korean national, who is accused of crimes including breaches of capital-markets law. Prosecutors have said they issued an arrest warrant for Kwon partly because there was “circumstantial evidence of escape” since he left for Singapore where Terraform Labs has a base.
It is estimated that approximately 280,000 people in South Korea invested money in Luna, some of whom reportedly filed a complaint with the prosecutor against Terraform Labs.
On Twitter, Kwon has denied that he is in hiding and maintained he is cooperating with authorities. In a statement made to the Wall Street Journal after the announcement of the Red Notice, Terraform Labs defended Kwon against the charges claiming that South Korea does not have jurisdiction to bring charges under its capital-markets law:
“We believe that this case has become highly politicized, and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law,” the spokesman said.
Even if South Korea do have a legal base to bring charges against Kwon, they will first need to find a way to extradite him to South Korea. This will require significant international cooperation.
At the time of writing, Kwon’s location on Twitter was set to Singapore, and Terraform Labs have defended Kwon against talk that he is evading arrest:
“Do Kwon’s location has been a private matter for months due to ongoing physical security risks to him and his family,” a spokesman said.
South Korea does not have an extradition treaty with Singapore. As of June 2021, Korea was in multilateral extradition treaties with members of the Council of Europe and in bilateral treaties with 31 countries, not including Singapore. However, under South Korea’s domestic Extradition Act extradition is possible based on a guarantee of reciprocity from the requesting state that it will accept extradition requests from Korea for identical or similar offences.
Singapore recently amended its own Extradition Act so that individuals can consent to their own extradition, bringing the legislation in line with international practice.
Perhaps in an effort to avoid lengthy extradition proceedings the Seoul Southern District Prosecutor’s Office filed to cancel Kwon’s passport so that Singapore would have to deport him unless he returned to South Korea within 14 days of receiving the notice of revocation. This is a concerning tactic and one used by Turkey to abuse Interpol’s processes by circumventing the need for a full Red Notice or extradition request and simply trying to get someone stopped and deported at the border with much lower scrutiny that is required for an extradition request.
There are other options available to South Korea to secure Kwon’s extradition. Sometimes extradition is sought on the basis of a UN convention or other international agreement, such as the UN Convention on Transnational Organised Crime. In other cases, extradition is sought via international crime conventions that contain ‘mutual legal assistance’ provisions. Some extraditions are standalone requests made on a more ad hoc basis.
In Singapore the Attorney General’s Chamber is the Central Authority for extradition and Interpol matters and it would process any extradition request from a State outside of a treaty, such as South Korea.
Under South Korea’s Extradition Act, extraditable offences are defined as those that are subject to the death penalty, life imprisonment or imprisonment for not less than one year under the laws of both Korea and the requesting state, unless the bilateral treaty says otherwise. Under Korean law, a prison sentence can be either with or without prison labour.
Prior to the crypto implosion, some experts had warned that Luna and TerraUSD were an elaborate Ponzi scheme compared with other crypto currencies which are ion theory backed by assets and commodities, like UK Sterling or the US dollar. Instead, Luna and TerraUSD were backed by an elaborate algorithm mechanism and other crypto currencies. After a drop in value of commodity-backed crypto currencies and a sudden liquidation of crypto coins and tokens, Luna imploded, sparking huge losses in crypto markets and intensifying regulatory scrutiny of digital assets.
The allegations may be legitimate but South Korea should be wary of trying to get around Interpol’s checks by using the lost/stolen passport system as a replacement for full extradition procedures.