'Terra·Luna Incident' Key Associate of Kwon Do-hyung, Arrest Warrant Dismissed

Court: "Difficult to Recognize the Necessity and Proportionality of Detention"

[Asia Economy Reporter Yoo Byung-don] Yoo, the head of operations at Terraform Labs and a key figure in the collapse of virtual assets Luna and TerraUSD, has avoided detention.

On the morning of the 6th, Hong Jin-pyo, the chief judge in charge of warrants at the Seoul Southern District Court, conducted a pre-arrest detention hearing for Yoo and stated, "It is difficult to see the necessity and substantiality of detention," thus rejecting the arrest warrant requested by the prosecution.

Judge Hong cited the following reasons for dismissing the warrant: Yoo does not dispute the fact that he operated and managed a 'bot' program; whether Luna qualifies as an 'investment contract security' under the Capital Markets Act; the scope and responsibility of Yoo’s involvement as an accomplice; and the fact that Yoo voluntarily returned to the country after an arrest warrant was issued.

Consideration was also given to Yoo having a fixed residence and family in Korea, as well as the difficulty of leaving the country again due to a travel ban.

However, Judge Hong pointed out, "The nature of the crime is very serious as it caused huge damages to numerous victims, and some of the charges appear to be substantiated."

The Financial and Securities Crime Joint Investigation Team (led by Dan Sung-han) of the Seoul Southern District Prosecutors' Office filed an arrest warrant for Yoo the previous day on charges including violation of the Capital Markets Act, fraud, and breach of trust.

The prosecution believes that Yoo, a close associate of Terraform Labs CEO Kwon Do-hyung, used a bot program to create the illusion of active coin trading, thereby inflating prices in a so-called 'market making' scheme.

This is the first time the prosecution has requested an arrest warrant for a key figure in the Luna and Terra incident.

The prosecution plans to review the court’s reasons for rejecting the warrant before deciding whether to reapply for Yoo’s arrest warrant.