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Terraform Labs Accuses South Korean Prosecutors Of Overreach
In a statement sent yesterday to the Wall Street Journal, Terraform Labs, the creator of failed digital currencies TerraUSD and Luna, claimed that South Korean prosecutors were overextending their authority in seeking a worldwide warrant for the arrest of their CEO Do Kwon.
The statement read,
“We believe that this case has become highly politicized and that the actions of the Korean prosecutors demonstrate the unfairness and a failure to uphold basic rights guaranteed under Korean law.”
The statement claimed that since “Luna Classic is not, and has never been, a security,” charging Kwon for violating South Korean Capital Markets laws is an overreach of the regulator’s authority.
Violation of Capital Markets Laws was the government’s original justification for Do Kwon’s arrest warrant.
The concern comes two weeks after the warrant was announced for Do Kwon. After a red notice was issued by Interpol on Tuesday, Kwon is now wanted in 195 different countries and is still “at large”.
The collapse of the prices of TerraUSD and Luna earlier this year wiped out almost $40 billion dollars from the digital currency market. Which led to the bankruptcy of Three Arrows Capital, one of the largest crypto hedge funds. After the project’s rebranding, TerraUSD Classic and USC were still not received well by investors due to trust concerns.
The Interpol Red Notice is the most powerful request that Interpol can issue. Law enforcers can use it in almost any country to locate and provisionally arrest the individual in question.
The Seoul Southern District Prosecutor’s Office Financial and Securities Felony Unit asked Interpol last week for help locating and apprehending Kwon. The nation’s foreign ministry has taken action to try and cancel Kwon’s passport to enforce deportation.
Earlier, it was thought Do Kwon had fled to Singapore with 5 Terraform executives, bringing along his family later. But Singapore authorities have since confirmed Kwon was not in the city-state.
Later, Kwon tweeted he was not on the run, saying, “Yeah, as I stated, I’m making zero effort to hide. I go on walks and malls. No way, none of CT [sic] hasn’t run into me in the past couple of weeks.”
Earlier this week South Korean prosecutors asked two digital currency exchanges, OKX and KuCoin, to freeze bitcoin assets tied to Kwon valued at around $67 million dollars (3,312 bitcoins). KuCoin complied with the freeze and OKX did not.
When South Korean authorities originally issued an arrest warrant for Do Kwon on September 14th, he was accused of violating the country’s Capital Markets Act. Terraform Labs on Wednesday argued that the ecosystem’s native token, Luna Classic (LUNC), wasn’t legally a security and did not fall under the Capital Markets laws.
Terraform Labs also accused the prosecutors of expanding the definition of a security due to the public pressure that followed the collapse of its algorithmic stablecoin TerraUSD.
Terraform Labs’ argument was fueled by the lack of a clear regulatory status in South Korea for cryptocurrencies and the firms who create them. The country, however, will soon put the Financial Services Commission (FSC) in charge of the crypto space, and the financial regulator is already expected to issue guidelines for security tokens by the end of 2022.
While Do Kwon continues to claim he is not on the run in his tweets, his location remains a mystery.
In more “stable” stablecoin news…
Circle Expands USDC Stablecoin to Five New Chains & Unveils Cross-Chain Transfer Protocol
USDC stablecoin issuer Circle is reportedly expanding the USDC stablecoin to five new blockchains – and also launching a cross-chain transfer protocol to support USDC interoperability.
This is an effort to bolster USDC’s market position as competition with rival issuers Tether and Binance is heating up – and decentralized finance platforms are crafting their own native stablecoins.
Currently, Circle’s USDC is available on nine blockchains. It plans to strengthen its market position and increase access across multiple chains by adding USDC to five more chains. The five chains are Arbitrum One, NEAR, Optimism, Polkadot and the Cosmos blockchain.
The expansion is expected to occur sometime between the end of this year and early next year.
It also plans to make USDC interoperable across supported chains by launching a cross-chain transfer protocol that will use a mint-and-burn mechanism and be facilitated by bridging contracts.
Circle’s expansion comes as competition among stablecoins is growing more than ever. Stablecoins are a $150 billion dollar asset class with cryptocurrencies and serve as an important bridge between traditional finance and the crypto space for transactions and trading.
USDC is the second-largest stablecoin of its kind and is widely used in decentralized finance platforms.
USDC’s market position, however, is being challenged. It has lost considerable market share recently and its circulating supply has dropped to $49 billion from $55 billion since August. A slew of decentralized finance (DeFi) platforms are crafting or have already issued their own native stablecoins, while rival top issuers Tether and crypto exchange Binance both stepped up to expand their own stablecoins, UST and BUSD, respectively.
Circle aims to bolster USDC’s availability across crypto networks, according to Joao Reginatto, Circle’s vice president of product.
“Extending multi-chain support for USDC opens the food for institutions, exchanges, developers and more to innovate and have easier access to a trusted and stable digital dollar,” Reginatto said in a statement.
As a result of the expansion, USDC will be available on 14 blockchains total, having been issued previously on Algorand, Avalanche, Ethereum, Flow, Hedra, Polygon, Solana, Stellar, and Tron.
Its main rival, the $68 billion USDT, circulates on 13 chains and looks to expand to Polygon, according to Tether’s website.
The transfer protocol will work via a mint-and-burn mechanism and be facilitated by bridging contracts. When someone sends USDC from one chain to another, the tool will destroy (burn) the transferred amount on the original chain and create (mint) the same amount on the destination chain.
The tool will debut on the Ethereum and Avalanche blockchains first, then will expand to the rest of the chains where USDC circulates.
Interbank messaging system SWIFT has partnered with price oracle provider Chainlink to work on a proof-of-concept for a cross-chain interoperability protocol (CCIP) that would allow traditional finance firms the ability to transact across blockchain networks.
SWIFT’s Strategy Director Jonathan Ehrenfeld Solé stated that there is “undeniable interest from institutional investors into digital assets.” CCIP will enable these investors to access digital as well as traditional assets on one platform.
The proof-of-concept involves Chainlink’s Cross-Chain Interoperability Protocol, which allows for token transfers across blockchains as well as the development of cross-chain applications.
The tie-up was announced during an event in New York on Wednesday. During the panel, Chainlink co-founder Sergey Nazarov and SWIFT strategy director Jonathan Ehrenfeld Solé framed the project with a focus on the difficulties in bridging the worlds of traditional and decentralized finance.
SWIFT is no stranger to blockchain experiments. The messaging network operator announced a bid last year to test the tokenization of real-world assets, and the Chainlink Labs partnership fits within that framework.
Cross-chain capabilities have been the focus of numerous projects in the past year, with development teams focused on developing secure ways to move assets from one chain to the next. But cross-chain mechanisms have proven to be a significant security challenge, with so-called bridges being targeted by hackers and coder exploiters.