A complaint filed by the US Securities and Exchange Commission alleges that Terra co-founder Do Kwon and Terraform Labs laundered more than $100 million worth of bitcoin from the platform following its crash in May 2022.
According to the SEC complaint filed in the U.S. District Court for the Southern District of New York on Feb. 16, Kwon and Terraform transferred over 10,000 bitcoins (BTC) from the platform and Luna Foundation Guard to a cold wallet and then to a Swiss bank account for conversion. in fiat. The financial regulator said the Terra co-founder and his company could have access to more than $100 million in cash since withdrawals began in June 2022.
In addition to defining the Bitcoin supply, the SEC said that Kwon and Terra artificially re-pegged the TerraUSD (UST) dollar — the stablecoin was one of the largest by market capitalization at the time of the platform’s crash. According to the complaint, the platform was asking a third party to buy “a huge amount of UST to restore the $1 peg” when it fell below $1 in May 2021, misleading investors about its stability and reliability:
“If the price of UST falls below the $1 ‘peg’ and is not promptly restored by the algorithm, it would spell doom for the entire Terraform ecosystem given that UST and LUNA had no asset reserve or any other backing.”
The Securities and Exchange Commission also said that several tokens associated with the collapse of Terra were “crypto asset securities” falling under its regulatory purview. According to the SEC, these tokens included UST, LUNA and shelled LUNA, as well as MIR and mAssets tokens developed under the Terra Mirror protocol.
“The Defendants solicited investors for these cryptoassets by touting their potential profits,” the SEC said. “Defendants have repeatedly stated that cryptoassets will appreciate in value due to Terraform’s development, maintenance, and promotion of its blockchain, protocols, and the entire Terraform ecosystem.”
Terra’s business ties were also targeted by the financial regulator, as the SEC reported that Chai – a South Korean payment application associated with Terra at the time – “did not process or conduct transactions on the Terraform blockchain.” Rather, Terra allegedly reported on transactions “that have already taken place in the real world using Korean won,” while stating to the public that Chai was transacting on the blockchain.
“On at least five occasions between October 2021 and March 2022, there were one or more days when no transactions were confirmed on the Terraform blockchain,” the SEC said in a statement. “However, there is no evidence that the Chai payment app was not functional during these periods.”
Do Kwon has been accused of fraud by the Securities and Exchange Commission and their allegations include that he lied about the Terra-Chai relationship.
In October, I also interrogated him about the forgery of Chai’s transaction data.
Full interview here: https://t.co/xZyRGFBYnh pic.twitter.com/iQ4XT8q7X7
— Laura Shin (@laurashin) February 17, 2023
‘Wild’ – SEC Chasing Terra Resonates With Crypto Lawyers
Kwon continued to be active on his Twitter account after the Terra crash, despite being blamed by many crypto users for the loss of their funds and the apparent “wave event” leading to multiple bankruptcies amid the cryptocurrency crash in 2022. South Korean authorities reportedly sent two officials to Serbia in an attempt to hunt down the co-founder of Terra. Kwon’s whereabouts are unknown at the time of publication.
Credit : cointelegraph.com
