Terraform Labs, the blockchain stablecoin UST’s creators, are currently being investigated by prosecutors in Seoul after allegations that the company and co-founder Do Kwon are still in possession of a substantial sum of money ($100 million) held in a Swiss bank account. The Seoul Southern District Prosecutor’s Office has revealed that it has been closely monitoring the movement of Terra-linked bitcoin and has alleged that Do Kwon and his associates transferred 10,000 BTC to a fintech bank headquartered in Switzerland. Sygnum Bank, a digital asset financial institution based in Zurich, has reportedly received this sizable transfer. The U.S. Securities and Exchange Commission’s charges against Do Kwon also discuss the 10,000 bitcoin being sent to a Switzerland-based financial institution. It appears that the investigation into Terraform Labs and Do Kwon’s financial dealings is still ongoing, and further details may come to light concerning this matter.
Leading up to Terra’s collapse, Terra’s Luna Foundation Guard (LFG), an organization created to defend the blockchain stablecoin UST’s dollar peg, accumulated a massive amount of bitcoin. The funds were meant to protect UST from dropping below the $1 parity but the fallout was so bad, LFG and Terra’s leaders like Do Kwon could not save it. After the collapse, it was speculated that LFG did not use all the funds to defend the stablecoin, and LFG fired back by releasing an audit that claimed the group used more than 80,000 BTC to defend the coin’s peg. However, blockchain researcher Ergo BTC discovered that the blockchain “tells a different story,” claiming that LFG may have declared ownership of a single wallet holding 313 BTC, but their actions have left a breadcrumb trail of evidence that could be easily followed. Ergo discovered a group of fifteen significant Binance withdrawals made to a single address. The coins were then consolidated and used in a series of transactions spanning several months. Shortly after the first withdrawal from Binance, 665 BTC were spent on Kucoin, and on May 16, the remaining 313 BTC were transferred to the new LFG address, providing evidence of their association.
Terraform Labs and Do Kwon’s ongoing allegations highlight the need for transparency and honesty within the cryptocurrency world. As the digital asset space grows in popularity, governments worldwide are taking a closer look at the industry and regulations are expected to follow suit. The SEC has been cracking down on crypto companies for some time, and this recent investigation into Terraform Labs is just one example. This case emphasizes the importance of regulation and compliance, as it is crucial for companies to adhere to established legal frameworks to avoid potential legal repercussions.
As the investigation continues, it is essential for companies in the cryptocurrency space to prioritize transparency and honesty to continue building trust with their customers and investors. In conclusion, Terraform Labs and Do Kwon’s legal issues highlight the industry’s need for regulation, compliance and transparency to protect both the public and the reputation of the industry.
