South Korean prosecutors are actively tracing illicit funds linked to Terraform Labs co-founder Do Kwon and his associates. A recent investigation identified 414.5 billion won ($314.2 million) in illegal assets, with approximately 91.4 billion won ($69 million) of that amount directly linked to Kwon. Despite the large sum of money tied to Kwon, the South Korean authorities are unable to recover any of the assets due to Kwon’s reported conversion of the funds into Bitcoin using overseas exchanges.

According to a report published by KBS, a local media outlet, Kwon converted most of the illicit funds into Bitcoin instead of investing in physical assets. This has made it difficult for the South Korean authorities to recover the assets since they are not under their jurisdiction. The investigation into Terra’s collapse by the United States Securities and Exchange Commission (SEC) revealed that Kwon siphoned nearly $100 million worth of Bitcoin from Terra after the collapse.

Further reports based on an SEC interview with former Terraform Labs revealed that Kwon was accused of siphoning $80 million a month before the collapse of the Terra ecosystem. This has led South Korean prosecutors to actively trace properties associated with Terraform Labs executives to recover some of the illicit funds from the Terra debacle.

In their pursuit of justice, South Korean prosecutors have seized homes and other assets to stop former Terra employees from selling assets that might be tied to legal cases. Among the assets seized are residences in Seoul owned by former CEO Shin Hyun-seong and others. The prosecutors also filed foreclosure actions against foreign-registered vehicles, lands in Hwaseong and Gapyeong in Gyeonggi-do, and Taean in South Chungcheong Province.

Terra was a booming crypto ecosystem until its $40 billion collapse in May 2022 due to fraud, with Kwon at the epicenter. Initially thought to be a market-triggered event, the investigation revealed that Terraform Labs had dumped over $450 million of UST on the open market in the three weeks leading up to the depeg of the TerraUSD (UST) stablecoin. Four days after the last sale, UST started collapsing. Despite an arrest warrant from South Korean authorities and an Interpol red notice against his name, Kwon evaded arrest for nearly a year before being caught on March 23 in Montenegro.

In conclusion, the South Korean authorities are actively pursuing justice in the Terra debacle by tracing illicit funds and recovering assets tied to Terraform Labs executives. The investigation revealed the scale of the fraud committed by Do Kwon and Terraform Labs, leading to the collapse of the crypto ecosystem. Although most of the illicit funds have been converted into Bitcoin, the authorities remain vigilant in their efforts to recover the assets and bring those responsible to justice.

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