A South Korean judge on Thursday canceled the arrest warrant for a Terraform Labs executive, according to Yonhap News, complicating authorities’ crackdown on the company that spawned the failed Terra stablecoin ecosystem.
Earlier Thursday, CNBC reported the Seoul Southern District Prosecutors' Office arrested a suspect with the surname Yu; Yu was Terra's head of general affairs at Terraform Labs. That provisional arrest was prosecutors’ first in the Terra case, but it may now fall through: In South Korea a warrant needs to be granted within 48 hours of the arrest or the person must be released.
The judge overseeing the warrant rejected the prosecution’s request, saying, “It is difficult to see the necessity and significance of arrest," according to Yonhap News.
The news comes after South Korea invalidated the passport of Terra co-founder Do Kwon earlier. Kwon has maintained his innocence and has denied reports that authorities have frozen 56.2 billion won ($39.6 million) of his cryptocurrency assets.
The Terra ecosystem imploded earlier in the year, leading to a subsequent market crash and a wave of related bankruptcies. The collapse led to a worldwide debate on cryptocurrency regulation and stablecoins. Recently, South Korean authorities have issued arrest warrants for Terra co-founder Do Kwon and his inner circle on multiple charges.
Seoul Southern District prosecutors' office did not immediately respond to CoinDesk's request for comment.
UPDATE (Oct. 6, 14:08 UTC): Adds additional information on Kwon in the fourth paragraph.
UPDATE (Oct. 6, 16:10 UTC): Adds information on the dismissed warrant.