Terraform Labs, the firm behind failed cryptocurrencies TerraUSD and Luna, accused South Korean authorities of overreaching their authorities two weeks after prosecutors issued an arrest warrant for its co-founder and CEO Do Kwon.

In a statement sent to the Wall Street Journal, a Terraform Labs spokesman said Luna was not a security in legal terms and hence, cannot be brought under South Korea's capital-markets law.

"We believe that this case has become highly politicized and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law," the spokesperson said.

The prices of Luna and TerraUSD crashed almost 99% earlier this year, wiping almost $40 billion from the crypto market. This led crypto hedge fund Three Arrows Capital to bankruptcy. The project was then rebranded to TerraUSDClassic (USTC) and TerraClassic (LUNC) but it failed to gain the trust of the investors.

"We believe, as do most in industry, that Luna Classic is not, and has never been, a security, despite any changes in interpretation that Korean financial officials may have recently adopted," Terraform Labs' spokesman said.

Meanwhile, Interpol issued a red notice Tuesday requesting law enforcement agencies all over the globe to locate and arrest Kwon, who went missing after leaving South Korea for Singapore. Authorities in Singapore confirmed Kwon was not in the city-state.

Later, Kwon tweeted he was not on the run and said, "Yeah, as I said, I'm making zero effort to hide. I go on walks and malls; no way none of CT hasn't run into me the past couple of weeks."

"Do Kwon's location has been a private matter for months due to ongoing physical security risks to him and his family," the firm's spokesman said while confirming that the Terraform Labs head's houses were broken into in South Korea and Singapore.

Terra Community AMA with Do Kwon (April 2021) 1-22 screenshot
Terra CEO, Do Kwon is hosted by long standing member of Terra Community @SebNondzee! Terra Official YouTube Account