• The US Securities and Exchange Commission (SEC) has charged Do Kwon, the founder of Terraform Labs, with fraud.
• It is alleged that Kwon cashed out over $100 million worth of Bitcoin from a cold wallet using an unnamed banking provider in Switzerland.
• The SEC claims that Kwon and Terraform failed to provide full disclosure to investors about LUNA and Terra USD tokens, leading to devastating losses for investors.
SEC Charges Do Kwon with Fraud
The US Securities and Exchange Commission (SEC) has announced charges against Do Kwon, the founder of Terraform Labs, alleging fraud. According to the regulator’s complaint, Kwon and his company engineered a scheme that defrauded investors.
Kwon Cashes Out $100M Worth of BTC Via Swiss Bank
Do Kwon reportedly held 10,000 BTC in a cold wallet. Bloomberg reported Thursday that he cashed out a massive $100 million worth of Bitcoin via an unnamed bank located in Switzerland. The transfers began in June 2022 as part of more than 10,000 BTC stored in the wallet and were periodically withdrawn through the Swiss-based bank up until the date of SEC’s complaint against him.
Alleged Misleading Statements to Build Trust
The SEC’s charges point to a plan to mislead investors related to the collapse of LUNA ecosystem which had previously been valued at $40 billion and resulted in an intensifying crypto winter. LUNA was Terraform Labs’ native token while Terra USD (UST) was its stablecoin offering used by many traders worldwide as part of their portfolios.
Do Kwon Still on Run
Unlike Sam Bankman-Fried who was arrested swiftly following the collapse of his firms FTX and Alameda Research, Do Kwon continues to evade capture despite multiple efforts by law enforcement agencies across jurisdictions such as Switzerland where he is believed to have transferred some funds amidst other locations around Europe.
Investors Devastated
Gary Gensler ,Chairman at SEC noted: “We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD… We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.“