Terra

Do Kwon is increasingly threatened, the US and South Korea cooperate to investigate the case of Terraform Labs

The governments of the United States (US) and South Korea have reportedly agreed to share data on ongoing crypto cases, including the case surrounding Terraform Labs CEO Do Kwon and the collapse of cryptocurrency terra (LUNA) and stablecoin terra usd (UST).

Reporting from Bitcoin.com , Tuesday (12/7/2022), South Korean Justice Minister Han Dong-hoon met with United States prosecution officials during a visit to New York last week.

US officials present at the meeting included the chief adviser to the United States Attorney, Andrea Griswold and co-head of the Commodity Securities Fraud Task Force of the US Attorney’s Office for the Southern District of New York, Scott Hartman.

Officials from both countries examined ways to enhance cooperation in investigations of major securities fraud and financial crimes, including those involving cryptocurrencies. In particular, they discussed the exchange of information between the Seoul Southern District Prosecutors’ Office and the New York Southern District office.

Both parties agreed to share their latest investigative data on ongoing crypto cases, including cases surrounding the collapse of cryptocurrency terra (LUNA) and algorithmic stablecoin terra usd (UST).

Both the US and South Korea are currently investigating Terraform Labs founder Do Kwon over the collapse of LUNA and UST. South Korean prosecutors are investigating possible fraud charges. In addition, the Korean government is considering imposing a unified listing standard on cryptocurrency exchanges.

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In the US, the Securities and Exchange Commission (SEC) is investigating Do Kwon and whether marketing of UST before the fall violated investor protection regulations.

The collapse of LUNA prompted SEC Chairman Gary Gensler to warn many crypto tokens would fail. Meanwhile, US lawmakers are also calling for urgent stablecoin regulation.

Do Kwon Company Alleged Price Manipulation with Billions of Stablecoins

TerraPreviously, Terraform Labs and Luna Foundation Guard (LFG) were suspected of price manipulation using billions of stablecoins according to a recent report.

Blockchain security firm Uppsala Security and CoinDesk Korea jointly carried out an investigation into the flow of funds, publishing research findings suggesting illicit activities may have occurred by the two companies Terraform Labs and LFG.

 

Both parties used on-chain data forensics techniques to study how Terraform Labs and LFG moved funds. It lists four different addresses as very important and shows how Terra USD (UST) was exchanged for Magic Internet Money (MIM) and eventually became Tether (USDT).

The first wallet, called “exchange wallet A,” was used to convert over three billion UST in MIM and then USDT. Distribution wallet A is used to transfer about 2.36 billion UST to exchange wallet, while “exchange wallet A” receives more than 1 billion USDT from exchange wallet A.

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The point of this report is that this wallet is used to send funds to both centralized and decentralized exchanges including Abracadabra, Binance, and Curve. The movement of this secret fund raised suspicion, and now the public must investigate further to see how suspicious it is.

Terraform Labs Problems Get Worse

Terra

Terraform Labs is already under siege with several investigations. South Korean authorities are investigating the company and Do Kwon, while the United States Securities and Exchange Commission is also conducting its own investigation.

The Uppsala Security report does not explicitly state any manipulation or money laundering. The report reads “For what purpose was this large amount of USDT created, and what ended up happening with this USDT being deposited into this exchange account?”.

“Unfortunately, this is not something we can answer for, as all we can provide are facts based on on-chain data,” the report said.

But if Terraform Labs and LFG do engage in illicit activities with the funds, then the problem could get worse. In addition, accusations against Do Kwon also surfaced, alleging he cashed USD 2.7 billion from Terra.

New Case, Do Kwon and His Company Sued for Misleading Investors

Terra

 

Previously, following the Terra stablecoin depegging incident, a class action lawsuit was filed against the company Terraform Labs (TFL) and a number of other crypto companies over the collapse of terra usd (UST).

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The case against Terraform Labs (TFL) was filed by plaintiff Nick Patterson on behalf of another person residing in the same location and the law firm Scott+Scott LLP.

According to documents recently filed in US District Court in Northern California, Terraform Labs is accused of selling unregistered securities and misleading investors.

In addition to TFL, Jump Crypto, Jump Trading, Republic Capital, Definance Capital, GSR Markets, Three Arrows Capital, Nicholas Platias, and Do Kwon are also named in the lawsuit. Patterson and the plaintiffs’ group accused the defendants of “repeatedly touting the stability of the UST.”

Additionally, the lawsuit claims Terra-based tokens are unregistered securities.

“The Terra tokens are securities that TFL failed to register before being sold,” the plaintiff’s attorney said in a statement quoted from Bitcoin.com, Wednesday, June 22, 2022.

The lawsuit came to light on June 18, 2022, and was brought to light by one of the former TFL employees, Fatman who tweeted about the case being filed in California. The lawsuit says investors were told UST and Anchor prices are stable.

The lawsuit against TFL and the hedge fund group follows a recent lawsuit against Binance US, which was accused of selling unlisted securities and advertising terra usd (UST) as “safe.”

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