Do Kwon Allegedly Launders $80 Million in a Month, SEC Court Investigates Terra’s Downfall -Breaking
Do Kwon is a troublemaker everywhere. Even in Singapore, the headquarters of Terraform Labs, Do Kwon appears to have trouble finding his way. South Korea has already begun investigating whether Do Kwon knew of the collapse of Terra (LUNA), and (UST) before he dissolved his company. Authorities are also looking into tax evasion and the Seoul Metropolitan Police Agency is investigating worker’s embezzlement of Terra Luna funds in the form of BTC.
There’s Nothing Stable about this Stablecoin, SEC Says
Now, the US Securities and Exchange Commission investigates whether Terra (UST), a product of the Terra Group, was fraudulently marketed before its market crash and subsequent decline to pennies per dollar.
Stablecoins in cryptocurrency are supposed to offer safe investment options. However, Terra (UST), was backed not by a physical asset, nor a fiat money like USD, but an algorithm. The flaw in such a mechanism made a lot of investors buy Terra’s other native token, LUNA, in order to save the price of UST.
Both Terra (UST) as well as Terra (LUNA), went through a fast downward spiral that ended in a flatline. Many people were concerned about the validity of this structure. Michael J. Hsu, the Acting Comptroller of the Currency at SEC has perceived this situation as a ‘wake-up call’.
Bloomberg: A person who is familiar with the issue says that the US Securities and Exchange Commission is investigating whether TerraUSD’s marketing before the crash of last month was in violation federal investor-protection laws. https://t.co/KyLFhfLaDs
— Vincent Lee (@Rover829) June 9, 2022
Potential Violations of Federal Investor Protection Rules
Multiple counts could be brought against federal investors protection laws, according to SEC enforcement attorneys. When the price for the pseudo stablecoin UST began wobbling on May 7th and fell to an unimaginable 35 cents on May 9, the collapse of algorithmic stablecoin occurred. UST fell to its final resting place on May 31st with a market value of $0.025. The stablecoin was removed from the trading market after Terra declared LUNA 2.0.
Terraform Labs’ CEO Do Kwon and Terraform Labs are facing SEC charges for an older subpoena. The case relates to the litigation of November 12, 2021 regarding a Mirror Protocol-related system company. They include, but don’t limit themselves to:
- Federal securities laws are violated
- Registering the sale and offer of securities is not necessary
- Unregistered dealer or broker
- Security swaps can be sold outside the national exchange’s borders
- Securities transactions being conducted by an unregistered company
$80 Million Clean Up Right Before Terra’s Demise
JTBC News reports that the SEC has begun investigating money laundering claims. Terraform Labs’ operating expenses were approximately 100 billion won. That sums up to about $80 million being laundered in a month just before Luna’s collapse. According to the SEC, there were internal statements documenting the money being sent ‘into dozens of cryptocurrency wallets’.
JTBC reported that Do Kwon is rumored to be laundering $80million per month. https://t.co/spr4BdX6L5 Do Kwon responds that there’s a lot of misinformation and falsehood out there. https://t.co/sNHiERgxqo
— Wu Blockchain (@WuBlockchain) June 9, 2022
What You Need to Care About
The renewed version of Terra’s blockchain, LUNA 2.0 went live on the markets just a few weeks ago, but it already seems that investors are wiping the floor with Do Kwon’s Terra Luna Classic (LUNC) and Terra (LUNA).