SEC Collaborates with South Korea in Probing Terraform Labs and Do Kwon

The U.S. Securities and Exchange Commission (SEC) has secured approval to collaborate with South Korea in its probe against Terraform Labs and its co-founders, Daniel Shin and Do Kwon. This decision, sanctioned by District Judge Jed Rakoff on August 16, allows the SEC to question Shin and access documents from Chai Corporation, a Seoul-based payments provider he founded.

Shin and Kwon co-founded Chai in 2019, initially operating closely with Terraform. By 2020, the companies had diverged. The SEC’s investigation focuses on Chai’s use of the Terra blockchain and its relationship statements with Terraform. The reasons behind Chai’s separation from Terraform are also under scrutiny.

While Terraform Labs and Kwon didn’t oppose the SEC’s motion, they presented their own queries and have previously refuted the SEC’s claims. Accusations suggest that they falsely stated Chai’s use of the Terra blockchain for transactions.

In May 2022, the Terra cryptocurrency ecosystem experienced a staggering $40 billion loss, causing its token, LUNA, to plummet nearly to zero and triggering a broader market crash. Subsequently, the LUNA token split into two distinct entities: LUNA and LUNA Classic (LUNC). South Korean prosecutors have since charged Shin with fraud, accusing him of hiding the risks associated with investing in Terraform’s cryptocurrency.

On February 16, 2023, the U.S. Securities and Exchange Commission (SEC) charged Singapore-based Terraform Labs and its CEO, Do Hyeong Kwon, with conducting a multi-billion dollar crypto fraud from April 2018 to May 2022. The scheme involved various unregistered crypto asset securities, including “mAssets” and the Terra USD (UST) stablecoin. The SEC alleges that Terraform and Kwon falsely marketed these assets, promising high returns and misleading investors about their stability and usage. In May 2022, the value of these tokens crashed. The SEC emphasizes the importance of transparency and adherence to securities laws in the crypto sector.

Kwon is currently jailed in Montenegro for trying to exit using a fake Costa Rican passport, resulting in a three-month sentence. He faces investigations in both the U.S. and South Korea, beyond the SEC’s complaint.

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OPNX to Launch FatManTerra Justice Token, Airdropping to LUNC and LUNA Holders

OPNX has announced the imminent launch of the FatManTerra Justice Token. This move comes in response to the commencement of legal proceedings against FatManTerra by several parties.

According to OPNX’s tweets, the Justice Token is a novel mechanism designed to return potential settlement outcomes to communities harmed by defamation.

The tokens will be distributed equally between RLB, LUNA, LUNC, and OX holders, representing four communities allegedly harmed by FatManTerra’s long-term malicious disinformation. The full details of the Justice Token can be found in OPNX’s official document.

OPNX has clarified that the distribution of Justice Tokens will be modified to reflect the communities harmed as mentioned above. It’s also important to note that Justice Tokens must be considered independent meme tokens with no intrinsic value, no backing, or expectation of return.

A distribution of the entirety (after costs) of potential settlement outcomes will only occur if determined by the justice system, at OPNX’s discretion.

In response to the announcement, FatManTerra replied, “There’s no way you guys are turning this into a scam too lmao,” expressing skepticism towards the initiative.

The launch of the FatManTerra Justice Token by OPNX marks a unique approach to addressing legal disputes and alleged defamation. While the initiative has been met with both interest and skepticism, the final outcome of the legal proceedings and the distribution of the Justice Tokens remains to be seen.

It is worth noticing that OPNX is a new crypto and RWA exchange platform launched by controversial and bankrupted former Three Arrows Capital founders.

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Tether CTO Paolo Ardoino Dispels USDT Market Fear Amidst Rising Deposits in Curve 3Pool

Paolo Ardoino, CTO of Tether and Bitfinex, has responded to growing fears in the crypto market with an assertive tweet stating, “Markets are edgy in these days, so it’s easy for attackers to capitalize on this general sentiment. But at Tether we’re ready as always. Let them come. We’re ready to redeem any amount.” The statement seems to address recent speculations and rumors (FUD – Fear, Uncertainty, and Doubt) circulating around increased deposits of Tether’s stablecoin USDT into the Curve 3Pool.

An analyst using the Twitter handle ‘Fortitude’ had raised concerns about the sudden increase in USDT deposits into the Curve 3Pool. “Why is USDT being deposited into the Curve 3Pool in such great quantities? Now the percentage is 50%, up from 30% just 48h ago. Do they know something we don’t?” questioned Fortitude.

The commentator went on to suggest that such sharp spikes in asset deposits often precede significant market events, citing examples of the USDT depeg in May 2022 in relation to Luna/Terra, the FTX incident in November 2022, and the USDC depegging in March 2023. The analyst expressed hope that the increased USDT deposits were a “nothingburger”, while maintaining an interest in the ensuing developments.

USDT has a longstanding history of being a focal point for FUD within the cryptocurrency space. Critics frequently express skepticism towards the stablecoin’s peg to the US dollar, and rumors of insolvency have circulated in the past. Tether has consistently refuted these claims, maintaining that every USDT token is fully backed by reserves.

In response to the concerns, Ardoino’s tweet portrays a confident stance, emphasizing Tether’s preparedness to handle any potential market turbulence. By asserting that Tether is ready to “redeem any amount,” Ardoino implies the company’s robust reserve position, seeking to quell anxieties surrounding its solvency and the stability of USDT.

This public response from Tether’s CTO is part of an ongoing effort by the company to address concerns and maintain transparency in its operations. The rapidly evolving cryptocurrency landscape continues to prompt companies like Tether to stay proactive in dispelling market fears and ensuring stability for their users.


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South Korean Court Clears Former Terraform Labs CEO of Security Violations

A South Korean district court has cleared former Terraform Labs CEO and co-founder Hyun-seong Shin of security violations in a ruling that is expected to affect how the country’s regulators treat cryptocurrencies. The court ruled that LUNA (LUNA), the native token of the LUNA ecosystem, is not a security under Korea’s Capital Markets Act.

The prosecution had accused Shin of fraudulent transactions that breached the Capital Markets Act and committed crimes involving property, making property confiscation a possibility. However, the southern district court in Seoul dismissed the appeal, stating that it is difficult to see Luna Coin as a financial investment product regulated by the Capital Markets Act.

The court’s decision is significant because it categorically states that Luna is not a security. Previous court rulings had used more cautious language, such as “there is room for dispute in terms of the law” and “it is questionable whether the Capital Market Act can be applied.” The latest ruling clarifies the regulatory status of LUNA and other native tokens in South Korea.

While rejecting the prosecution’s request for confiscation of Shin’s properties, the court noted that it is difficult to see that the property subject to the claim had been “acquired by a crime or an asset derived from it.” The ruling makes the Terra-LUNA saga a case of fraud and breach of trust rather than a violation of the Capital Markets Act.

Shin’s lawyer hailed the court’s decision, stating that Luna could not easily be considered an investment product based on the ruling. The court also rejected the prosecution’s requests for an arrest warrant for Shin and individuals associated with the case.

However, the prosecution is still focusing on the securities aspect of the native token and has appealed to the Supreme Court against the verdict of the lower district court. The case highlights the need for clear regulatory guidelines for cryptocurrencies in South Korea and other countries.

The judgment by the Korean district court is in contrast to the stance of the United States Securities and Exchange Commission (SEC), which has charged Terraform Labs and its founder, Do Kwon, with violation of securities law. Kwon’s lawyers have denied the SEC’s securities fraud allegations.

The Terra-LUNA case is closely watched by the cryptocurrency community as it raises important questions about the regulatory status of native tokens and the scope of securities laws. The South Korean court’s ruling is likely to have a significant impact on the future of cryptocurrencies in the country and beyond. As the regulatory landscape evolves, it is essential for companies and investors to stay informed and compliant with the latest laws and guidelines.


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South Korea seizes $104M from Terra’s co-founder on unjust earnings.

South Korean authorities are continuing their efforts to bring closure to the victims of the year’s first crypto crash, which involved Terraform Labs. While the crypto exchange FTX has taken the spotlight away from other collapsed ecosystems, South Korean authorities are still working to help Terraform Labs’ victims.

Nearly six months after the Terra (LUNA) blockchain was formally shut down, officials in South Korea froze around $104.4 million (140 billion won) belonging to co-founder Shin Hyun-seong on the grounds that he may have made unlawful gains.

The assets of Shin, which are estimated to be worth more than 104 million dollars, have been placed under a temporary freeze after the Seoul Southern District Court gave its approval to a request made by the prosecutors.

The allegation concerned Shin’s alleged participation in the sale of pre-issued Terra tokens to unsuspecting investors.

According to reports from a local news outlet, the district court has placed a hold on the allegedly stolen monies until additional investigations can be conducted. This decision was made on the basis of the suspicion of benefitting from unauthorised LUNA sales.

Reports that Shin Hyun-seong, CEO of Luna, sold the company at a high point and realised gains or that he generated riches via other illicit techniques are not accurate, according to the company. The counsel for Shin was originally cited by Cointelegraph.

The preindictment preservation of the funds is a method for stopping criminals from getting rid of stolen money and forcing investors to suffer further financial harm or losses.

Shin is currently the subject of an investigation by the authorities in South Korea on two charges: making unfair profits from the issuance of in-house tokens LUNA and TerraUSD (UST); and leaking customer transaction information of Chai, a Korean payment app linked to Terra, to Terraform Labs. The first charge relates to the alleged making of profits from the issuance of in-house tokens LUNA and TerraUSD (UST).

As part of their investigation into the dissolution of the company, the prosecutors in South Korea issued a summons to the alleged co-founder on November 14 requesting that he appear in court.

The prosecution levelled the charge of price manipulation against Do Kwon, one of the co-founders of Terra, during the first week of November.


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Report on Kwon’s Escape to Dubai in Sept is True: Korean Prosecutors

Prosecutors in Seoul have said that a report about crypto fugitive Do Kwon’s departure from Singapore to Dubai in September is true. They added that his travel to Dubai is likely a stopover to another destination.

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Bloomberg released the information stating that “prosecutors in Seoul said in a text message late Thursday that a report Kwon had left Singapore and flown to Dubai likely as a stopover to destinations unknown ‘was not false.'”

Kwon faces charges in South Korea and has been accused of breaching capital-markets law. Although he has said he is ready to cooperate with the authorities, Kwon has kept his location a mystery, citing that he has received death threats.

Kwon went incognito in September after officials said he was no longer in Singapore, where his project had a base.

“It’s not in the interest of being on the run,” he said. “I don’t want to disclose where I live. It’s just that every time the location where I live becomes known, it becomes almost impossible for me to live there.”

According to Blockchain.News, Kwon and five other Terraform Labs executives face allegations of breaching capital markets laws in South Korea. They were issued an arrest warrant on September 13 from the court in Seoul for allegedly violating the nation’s capital markets law after the highly-publicized collapse of its algorithmic stablecoin UST and its associated token Luna in May.

Almost two weeks later, a red notice from Interpol was issued for his arrest after a request from prosecutors in South Korea, making him a fugitive in almost 200 countries across the globe.

According to The Korea Times, South Korean investigation authorities have requested neighbouring countries to cooperate in identifying Kwon’s specific whereabouts.

The Korea Times also reported that according to the Ministry of Foreign Affairs, Kwon’s passport would soon be invalidated. 

He has until November 2, 2022, following which he will be barred from entering any country legally if he fails to give up his passport. Previously, he was ordered to surrender his passport on October 5. However, he refused to comply.

In May, Kwon’s Terraform Labs crypto project suffered a $60 billion implosion. It had a wider impact that affected the overall crypto market, which convulsed the digital-asset sector and saddled investors with losses.

Currently, the crypto sector still remains rattled by the downfall of the stablecoin, and recovery is still under process.

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South Korean Watchdogs Request Interpol’s Red Notice against Do Kwon

The controversy surrounding Do Kwon’s whereabouts continues to grow, given that South Korean prosecutors asked Interpol to issue a red notice against the Terraform Labs’ founder. 


The Seoul Southern District Prosecutor’s Office had aired its tribulations about Kwon’s noncooperative nature and that he did not intend to show up for questioning. 

“Prosecutors have made a request to Interpol for their assistance to locate Kwon, whose whereabouts remain unknown and to have him handed over to Korea,” the Prosecutors office said, adding that “Currently, we are in the process to locate the whereabouts of suspect Do Kwon and apprehend him,” a prosecution official added.

Over the weekend, Do Kwon insisted that he was not on the run and tweeted:

“I am not ‘on the run’ or anything similar – (from) any government agency that has shown interest to communicate, we are in full cooperation, and we don’t have anything to hide.”

Following the collapse of Terraform Labs’ native tokens UST and Luna in May, the crash triggered a $60 billion crypto meltdown. As a result, South Korean authorities have been pursuing him to get to the bottom line of the matter.

Recently, Seoul Court issued an arrest warrant for Do Kwon and five others for violating the nation’s capital markets law, Blockchain.News reported. 

Furthermore, various lawsuits against Kwon have emerged from investors in different countries.

A red notice issued by Interpol requires law enforcers globally to restrict persons from undertaking cross-border travels and being issued with visas. Moreover, it guarantees the provisional arrest of an individual pending surrender or extradition.

Kwon had initially travelled from South Korea to Singapore, given that Terraform Labs had a base at the latter. Nevertheless, his whereabouts remain scanty because the Singapore Police force hinted that Kwon was not in the nation.

LUNA sent shockwaves to the crypto market after collapsing to near-zero overnight despite it being among the top ten cryptocurrencies in May. 

Things started going south when the algorithmic UST stablecoin on the Terra network experienced a free fall to the extent that leading crypto exchange Binance temporarily halted its withdrawals together with that of LUNA.

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Singaporean Police Force Claims Do Kwon is Not in Singapore

The Singapore Police force has made it known that Kwon is not in Singapore.


This statement comes after a Spokesperson claimed that Kwon and five other individuals were issued an arrest warrant and were hiding in Singapore to avoid arrest.


Do Kwon, the primary developer of the LUNA cryptocurrency and the founder of the blockchain platform, terraform lab has been battling fraud charges due to the collapse of the two cryptocurrencies associated with Terraform Labs in May. Investors lost billions of dollars to the collapse globally and many have even called it a Ponzi scheme.


According to various sources, Kwon was subjected to a Search and Seizure operation in July but has pledged his commitment to corporate to local authorities as regards charges issued against him.


Singapore’s police have pledged their support to South Korea in the case of Kwon based on its jurisdictions both locally and internationally.


Terra USD became popular early in the year with the company’s non-profit outfit Luna Foundation Guard which is the company behind Terra USD made a pledge to acquire $10 billion worth of bitcoin to support its peg to the dollar. 


The algorithmic stablecoin further depegged from the dollar, sending an imbalance into the broader Terraform ecosystem. The cataclysmic drop in the LUNA and UST resulted in a ripple slump that affected other protocols and hedge funds connected to Terraform Labs.

With Do Kwon facing charges in at least one jurisdiction, he has come off as one of the most distressed personalities in the crypto ecosystem in recent times.

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Seoul Court Issues Arrest Warrant for Do Kwon and 5 Others

Do Kwon, the founder of the bankrupt Terraform Labs crypto ecosystem, has been issued an arrest warrant from a court in South Korea.


Do Kwon and five others have allegedly violated the nation’s capital markets law and have been issued a warrant from the court in Seoul, the prosecutor’s office informed Bloomberg.

Kwon and the other five are all located in Singapore, Bloomberg reported citing the prosecutor’s office. However, Kwon is yet to reply to an email sent by Bloomberg seeking comment.

Kwon’s tokens, including Terra (LUNA) and Terra Classic (LUNC), collapsed massively after the arrest warrant was issued. LUNA was trading as low as  $2.4964 at 3:55 PM HKT, down over 35.7%; while LUNC was trading at $0.0002716, down by over 22.3% during the Asia trading section, according to CoinMarketCap.

Terra Classic is home to the algorithmic stablecoin TerraClassicUSD (UST). It’s now-renamed LUNC token collateralized UST, which crashed in a bank run in May.

The fall of the Terra Platform in May led to the historic collapse of the TerraUSD (UST) stablecoins, which has affected the faith of many people in the digital-asset sector. Currently, the crypto sector still remains rattled by the downfall of the stablecoin, and recovery is still under process.

Do Kwon also helped create Luna as part of the Terraform Labs crypto ecosystem, which also lost its value during the fall of the ecosystem.

The ecosystem collapsed when TerraUSD – also known as UST – crumbled from its dollar peg and brought down the ecosystem he had built, after which, the prices of both tokens tumbled to near zero, a shadow of the combined $60 billion they once controlled.

Furthermore, the collapse of Terraform Labs’ associated tokens – LUNA and the UST stablecoin – effectively ushered in the first wave of the crypto winter.

Terra’s unravelling has triggered probes in South Korea and the US, as well as renewed regulatory scrutiny of stablecoins – digital tokens that are pegged to an asset like the dollar.

Currently, the probe into Terraform Labs by South Korean prosecutors is taking a whole new twist as watchdogs are making consultations on how best to classify the collapsed LUNA tokens – now known as Luna Classic (LUNC) – according to a report from Blockchain.News.

As reported by the Korean Herald, the Seoul Southern District Prosecutors Office’s Financial and Securities Crime Joint Investigation Team is consulting with industry stakeholders to determine the best designation for LUNA coins, according to the report.

Following the plummet in prices, companies who had exposure to the assets suffered such financial challenges that many, like Three Arrows Capital (3AC), could not recover from, the report stated.

However, Do Kwon has committed to cooperating with the investigations when the time comes. Bloomberg reported that in an interview with crypto media startup Coinage that floated the prospect of jail time, Kwon said, “Life is long.”

According to a report from a local media platform, the Yonhap news agency, Do Kown was subject to a “Search and Seizure” in July.

The raid was reportedly conducted on the operating office of 15 trading platforms and organisations that have connections to Terraform Labs. While the raid was not projected to last that long, the report had it that prosecutors were very focused on getting as much data as possible to bolster their investigative work on Terraform Labs.

“The amount of data requested by the prosecution was so enormous that it was impossible to complete the search and seizure within one day,” one of the exchange’s officials said, “If the data is insufficient while conducting forensics, it seems that it took time because the prosecution requested to extract more data through a data analyst.”

While the Korean Herald reported that South Korean prosecutors are broadening their investigations into the company. This move has stirred targeted raids on the home premises of Terraform Labs Co-Founder Daniel Shin as well as those of trading platforms that are suspected to have dealings with the now defunct company.

Image source: CoinAge


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