SEOUL (Sept 19): South Korean prosecutors have signalled that Do Kwon, the progenitor of a US$60 billion (RM273 billion) cryptocurrency wipeout, is at risk of an Interpol red notice and trying to evade redress over a meltdown that roiled digital assets.

"We are in the process of it," the prosecutors office said on Monday, when asked whether it has made a request for Interpol to step in. A red notice seeks assistance from law enforcement globally to make an arrest.

Kwon had moved from South Korea to Singapore, where his now collapsed Terraform Labs project had a base, but the city state said he was no longer there. Kwon's location is unclear and he denies being on the run even as prosecutors in Seoul seek his detention for allegations including breaches of capital-markets law.

There had been "circumstantial evidence of escape" ever since he left for Singapore, and that is why an arrest warrant was issued in the first place, the prosecutors' office said earlier.

The implosion of the TerraUSD algorithmic stablecoin and its sister token Luna sparked huge losses in crypto markets, which were already reeling from tightening monetary policy. Digital assets have yet to recover and regulators are pouring over the wreckage to see how to avoid a repeat. In South Korea, earlier ardor for crypto is being usurped by growing disdain.

Kwon tweeted over the weekend that he did not "have anything to hide" and was in "full cooperation" with officials but did not publicly reveal his location.

"We are in the process of defending ourselves in multiple jurisdictions — we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months," he also said on Twitter.

However, the Yonhap News Agency in a report cited prosecutors as saying that Kwon was not cooperating with probes and had told investigators via an attorney that he had no intention of appearing before them for questioning.

Kwon faces arrest in South Korea along with five others over the Terra unravelling. Officials could cancel his passport, which in theory would require him to return to Seoul within 14 days of receiving the notice of revocation.

He has a Singapore employment pass that is due to expire on Dec 7 and an application for another pass is pending, government records showed.

Not so stable

The TerraUSD stablecoin, also known as UST, crumbled from its dollar peg earlier this year and brought down the ecosystem Kwon had built. That has triggered probes as far afield as the US amid renewed regulatory scrutiny of stablecoins — tokens supposed to be pegged to an asset like the dollar.

Crypto companies, meanwhile, are also waking up to the need for far stronger risk management after a series of blow-ups including Terra, the Three Arrows Capital hedge fund, and crypto lender Celsius.

"Officials are asking questions like, how exposed were companies to some of these players that went down, and they want to take measures to make sure counter-party risk is addressed," said Sagar Sarbhai, head of business solutions and advisory at Fireblocks Inc. "People are concerned crypto could have a contagion effect and are being cautious."