An arrest warrant for Do Kwon, the co-founder of the defunct stablecoin issuer Terraform Labs, which was responsible for many losing their life savings after investing in crypto, has been issued by a South Korean court.

Kwon has been charged with violating the Capital Markets Act, according to a report by Bloomberg, citing a text message from the prosecutor’s office. The report also said adding that five other persons were included in the warrant.

Terra’s UST and its sister LUNA tokens lost nearly $45 billion (€44 billion) in value within 72 hours in May after it imploded, which caused other cryptos to take a hit with it and also caused the bankruptcy of three crypto companies.

The latest entity to collapse was Three Arrows Capital, which left billions being owed to creditors.

“I, and I alone, am responsible for any weaknesses that could have been presented for a short seller to start to take profit,” Kwon said in an interview in August with the NFTV series Coinage. He also said he was cooperating with authorities and reiterated his commitment to Terra.

In late May, Terra re-launched the token Luna, without the element that caused Terra’s steep fall – its stablecoin UST.

But news of the arrest warrant has shocked the crypto market and caused the Luna token to slump more than 16 per cent on Wednesday.

Stablecoins claim to be a relatively safe haven in the highly volatile crypto market. They are meant to be tied to a fiat currency and usually maintain a 1-to-1 peg with the US dollar.

However, UST, created by Terraform Labs, was an algorithmic stablecoin, meaning that instead of having cash and other assets held in a reserve to back its token, it used a complex mix of code and Luna to stabilise the process.