South Korea asks Interpol to issue red notice for 'Terra' crypto founder

South Korean prosecutors have asked Interpol to issue a red notice for Do Kwon, the co-creator of failed cryptocurrency TerraUSD, saying he refused to cooperate with their investigation into its $40 billion (€40 billion) collapse.

A red notice is a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action, according to the Interpol website.

Kwon had flown to Singapore before Terra crashed, but over the weekend, Singapore police said he is not in the city-state, raising questions about his whereabouts.

Meanwhile, South Korean authorities have moved to prevent Kwon from traveling.

"We have begun the procedure to place him on the Interpol red notice list and revoke his passport," an official from the Seoul Southern District Prosecutors' Office told the AFP news agency on Tuesday.

"We see him as being 'on the run' from the moment when he left for Singapore," the official said, adding: "We are aware that he has no will to cooperate with all investigations since then."

Kwon denies being on the run

A South Korean court recently issued arrest warrants for Kwon and five other people connected to Terraform Labs, the company behind the TerraUSD cryptocurrency. Authorities claimed Kwon said through his lawyers that he would not cooperate with their investigation.

However, Kwon, who remains active on Twitter, denied he was "on the run" on Sunday.

"For any agency that has shown interest to communicate, we are in full cooperation and we don't have anything to hide," he said in a tweet.

Hundreds of thousands of South Korean investors affected

The May collapse of Terraform Labs' cryptocurrencies, TerraUSD and Luna, affected an estimated 280,000 investors in South Korea.

TerraUSD was touted as a stablecoin, which are typically pegged to a real-world commodity or currency. However, TerraUSD was algorithmic and used code to maintain its price at around 1 US dollar.

Kwon's Terra/Luna system disintegrated in May, with the price of both cryptocurrency tokens plummeting to near-zero. Amid the $40 billion collapse, many investors lost their life savings.

The crash is also believed to have caused more than $500 billion in losses across the wider crypto market globally, according to industry analysts.