Where in the world is Do Kwon, asks the SEC?

The United States Securities and Exchange Commission (SEC) recently charged Do Kwon, the founder of Terraform Labs, for orchestrating a fraudulent scheme that resulted in at least $40 billion in investor losses. Kwon is the creator of Terra, a cryptocurrency project that had a native token called LUNA and a stablecoin called Terra USD (UST).

According to the SEC’s complaint, Kwon and Terraform Labs misled investors about the stability of UST and the adoption of their technology by a popular Korean mobile payment app called “Chai.” Instead, the company replicated Chai payments on the Terraform blockchain to make it appear as though their technology had more adoption than it actually did. The SEC also alleges that Kwon and Terraform Labs stored more than 10,000 BTC in a cold crypto wallet away from any crypto exchange and have been transferring these assets to an undisclosed financial institution in Switzerland, converting them into cash since May 2022.

The SEC charges Kwon and Terraform Labs with fraud, selling unregistered securities, unregistered security-based swaps, and other related claims. The agency is also seeking to bar Kwon and Terraform Labs from dealing in crypto and to have them pay penalties for illegally dealing in securities. The SEC’s Chair, Gary Gensler stated, “This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.”

The SEC did not reveal the name of the Switzerland-based bank involved in the complaint, but it disclosed that over $100 million in cash was withdrawn between June 2022 and February. Kwon’s whereabouts remain unknown, and authorities around the world have placed him on red alert. South Korean officials confirmed they made a trip to Serbia, following an intelligence report on his location.

Ultimately the SEC has charged Do Kwon and Terraform Labs with fraud related to their cryptocurrency projects. The agency alleges that the defendants misled investors, and stored large amounts of cryptocurrency in a cold wallet away from any crypto exchange. The SEC is seeking to bar Kwon and Terraform Labs from dealing in crypto, and to have them pay penalties for illegally dealing in securities. Kwon’s whereabouts remain unknown as authorities around the world continue to search for him.