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.

Image source: Shutterstock


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Prosecutors Investigate Do Kwon with Ponzi Fraud Charges amid Terraform Labs Dissolvement

Do Kwon’s scandal seem to be deepening. Prosecutors are investigating whether they will file Ponzi fraud charges against him following the Terra crash, according to The Korea Times. 

This comes a day after LUNA and UST investors filed a legal complaint against Do Kwon and Daniel Shin, the co-founders of Terraform Labs. LUNA and UST are the native tokens of the Terra network developed by South Korean fintech company Terraform Labs.

Having wiped out at least $38 billion of investors’ money in a week, prosecutors in South Korea are delving deeper into the Terra crash. For instance, the Seoul Southern District Prosecutors Office that is leading the case intends to seek the services of an investigation team based on lodged complaints and various factual backgrounds.

Per the announcement:

“Prosecutors in charge of the case are looking into whether they can make a Ponzi scheme case against “Anchor Protocol,” under which depositors of TerraUSD are guaranteed a 20 percent annual return.”

Financial authorities believe 280,000 South Korean investors hold approximately 70 billion LUNA coins, even though the exact amount remains unknown. 

Earlier this week, relevant governmental agencies beefed up crypto exchange inspections to try and unravel what transpired during the crash.

Did Do Kwon dissolve Terraform Labs just days before the crash?

Reportedly, Kwon dissolved Terraform Labs on April 30, just days before the Terra tokens came down with a thud. 

According to Digital Today, based on official documents in the custody of South Korea’s supreme court registry office, the decision to terminate the firm was reached at a general shareholders meeting held on April 30.

Similar sentiments were shared by a Reddit user, who noted:

“KWON-DO-HYUNG is listed in this Korean document as dissolving his company Terraform Labs on April 30th, registered May 4th. The act of dissolving just days before the collapse of UST suggests the intent to eliminate responsibility for the aftermath, which serves as evidence that he knew something was going to happen.”

Moreover, Kwon was recently slapped with a tax evasion fine of $78 million, Blockchain.News reported. 

Image source: Shutterstock


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New IRS Operation Threatens Crypto Tax Dodgers With Jail

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A newly launched IRS initiative called Operation Hidden Treasure was announced on Friday as part of a crackdown on widespread crypto tax evasion.

IRS Searching For Telltale Signs of Tax Evasion

Operation Hidden Treasure was announced at a Federal Bar Association presentation on fraud on March 05. The operation is specifically designed to root out people using crypto and virtual currency to evade taxes.

Carolyn Schenck of the IRS stated that the agency was looking for “tax evasion signatures.” These include structuring financial activity in blocks of $10,000 or less in order to fly under the radar of the IRS and its Form 8300 requirements.

While exchanges like Coinbase, for example, report tax information to the IRS with accounts over a certain transaction and balance threshold, the IRS is now training operatives to search for signs that crypto users are willfully avoiding detection.

Schenck stated that the IRS is using specialist vendors and trained agents to analyze and de-anonymize crypto transactions so that they can track and seize crypto in “both a civil and a criminal setting.”

“We see you,” she added, sending a message to traders attempting to evade taxes.

Nexo Earn

Jail Time for Crypto Tax Dodgers

IRS Criminal Investigation Division Chief James Lee spoke at the presentation, outlining the consequences of tax evasion.

“People have to know there’s a consequence for being willfully noncompliant,” said Lee, “and that consequence is going to jail.”

If the government cannot prove that tax evasion was deliberate, there are still civil consequences including a 75% penalty on the understated tax.

Solicitor Steve Tosher stated that “We expect to see more referrals for criminal prosecution and assertions of the 75% civil fraud penalty.”

Of course, the crypto tax procedure is notoriously opaque, with many users unclear on how to pay crypto taxes.

For those with undisclosed crypto taxes, consulting a tax lawyer is perhaps the best option. Crypto users would do well to remember that they do not share attorney-client privileges with their accountants, and their accountants could be summoned to testify against them. This is not the case with tax lawyers.

SIMETRI 10x potential

The IRS recently stated that it’s not necessary to pay taxes on Bitcoin buys made in dollars, offering U.S. citizens a way to reduce their crypto taxes. However, the new operation may mark the dawn of a new era for crypto taxes.

The government has been slow to catch up with the crypto industry, but regulation has finally arrived.

“These transactions are not anonymous,” said Schenck. “We see you.”

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