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Case against Do Kown is “highly politicized”: Terraform Labs

by Blockchain NewsSeptember 29, 2022

Terraform Labs believes South Korean prosecutors have “highly politicized” the case against founder Do Kown after he was issued an arrest warrant, the firm told the Wall Street Journal (WSJ).

A spokesman for the Singapore-based firm told the WSJ, “we believe that this case has become highly politicized and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law.”

The company – which introduced failed cryptocurrencies TerraUSD and Luna – also believes the prosecutors are overreaching their authority as Luna wasn’t legally secure, which would mean that South Korea’s capital-markets law does not cover it.

“We believe, as do most in industry, that Luna Classic is not, and has never been, a security, despite any changes in interpretation that Korean financial officials may have recently adopted,” the spokesman told the WSJ.

According to Blockchain.News, Kwon and five other Terraform Labs executives faced allegations that they breached capital markets laws in South Korea. They were issued an arrest warrant on Sept 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.

Kwon, however, said on Twitter that he was “making zero effort to hide” following the red notice reports for his arrest. But Singapore police issued a statement saying Kwon was not in its jurisdiction, Reuters reported on Sept 17.

The spokesman from Terraform Labs – which oversees the development of the Terra blockchain protocol – declined to provide Kwon’s location. “Do Kwon’s location has been a private matter for months due to ongoing physical security risks to him and his family.” He added that there had been attempted break-ins to his South Korea and Singapore residences.

The price of Luna plunged more than 99% over a few days in May, and with the collapse of TerraUSD, the crash erased some $40 billion of value from digital-currency markets. Furthermore, it wiped out the savings of thousands of investors worldwide.

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Crypto Fugitive Kwon Denies Hiding from Authorities

by Blockchain NewsSeptember 27, 2022

Terraform Labs co-founder has denied being in hiding after South Korean authorities asked Interpol to issue a red notice for his arrest.

“Yeah, as I said, I’m making zero effort to hide. I go on walks and malls, no way none of CT hasn’t run into me the past couple weeks,” Do Kwon tweeted.

The red notice has exposed hugely risky practices in the digital assets industry.

Kwon faces South Korean charges over a $60 billion cryptocurrency wipeout.

According to prosecutors in Seoul, law enforcement globally has been requested to locate and arrest the 31-year-old Kwon.

The red notice came after a South Korean court issued a warrant for Kwon’s arrest on Sept 14, and days later, after he claimed he was not on the run, South Korean prosecutors asked Interpol to issue a red notice against him.

Kwon moved to Singapore from South Korea earlier this and until recently, his whereabouts showed that he was still in the city-state. However, his location has become unknown after the local police on Sept 17 said that he was no longer in the city-state.

Kwon and five other Terraform Labs executives face allegations that they breached capital markets laws in South Korea. They were issued an arrest warrant on Sept 13 from the court in Seoul for allegedly violating the nation’s capital markets law.

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.

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.

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Tagged : Bitcoin / Blockchain / DOKWON / News / SOUTHKOREA / TERRAFORMLABS

Interpol Issues Red Notice for Terra’s Kwon

by Blockchain NewsSeptember 26, 2022

Terraform Labs co-founder has been issued with a red notice from Interpol, prosecutors in South Korea claim, according to a report from Bloomberg.

Following the red notice, law enforcement worldwide has the authority to locate and arrest Do Kwon. Interpol coordinates policing efforts between countries.

Kwon is facing a charge related to the US$60 billion wipeout of cryptocurrencies he created.

The news came after a South Korean court issued a warrant for Kwon’s arrest on Sept 14, and days later, after he claimed he was not on the run, South Korean prosecutors asked Interpol to issue a red notice against him.

The red notice has exposed hugely risky practices in the digital assets industry.

Kwon and five other Terraform Labs executives face allegations that they breached capital markets laws in South Korea. They have been issued an arrest warrant on Sept 13 from the court in Seoul for allegedly violating the nation’s capital markets law.

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

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Tagged : Bitcoin / Blockchain / DOKWON / Interpol / News / SOUTHKOREA / TERRAFORMLABS

Seoul Court Issues Arrest Warrant for Do Kwon and 5 Others

by Blockchain NewsSeptember 14, 2022

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.

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.

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Tagged : Bitcoin / Blockchain / Crypto / DOKWON / Luna / News / TERRAFORMLABS

Proposal to Burn 1.3bn UST Tokens Wins Approval from Terra Governance

by Blockchain NewsMay 27, 2022

The Terra governance has approved the proposal to burn a certain amount of TerraUSD (UST) tokens. The tokens were held in the project’s community pool and also deployed for past liquidity on Ethereum.

The total number of votes favouring the action was 99.3% of the total number. According to CoinGecko, the total number of tokens to be burnt equals more than 1.3 billion UST or around 11% of the existing 11.2 billion UST supply.

The burn will be taken care of by Terraform Labs – Terra’s core development firm – and it will be conducted in two phases, the Terra governance forum revealed.

In the first phase, Terraform Labs will permanently remove about 1 billion UST from the supply chain by sending those tokens from Terra’s community pool to a burn module.

While in the second phase, Terraform Labs’ team will bridge back 370 million UST to Terra from the Ethereum blockchain and destroy them.

The dollar-pegged algorithmic stablecoin UST token plummeted to $0.04 cents earlier in May, representing a 93% drop from its value prior to the fall from dollar parity.

The decision to burn the UST tokens comes following approval by the Terra governance system of the revival plan to re-launch the Terra blockchain and create LUNA 2.0 tokens. However, the controversial algorithmic UST stablecoin will not be a part of the rebirth.

According to Blockchain.News, the collapse of Terra’s native tokens LUNA and UST sent shockwaves to the crypto market as nearly $60 billion was shed off.

Do Kwon, the CEO of Terraform Labs, previously opined that hard forking the Terra blockchain would play an instrumental role in saving the ecosystem.

Therefore, UST will not be integrated into Terra 2.0 because it is regarded as the genesis of Terra trouble based on its algorithmic nature. The report noted:

“It will effectively create a new Terra chain without the algorithmic stablecoin. The old chain will be called Terra Classic (LUNC), and the new chain will be called Terra (LUNA). The chain upgrade will commence a few hours after the Launch snapshot.”

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Tagged : Blockchain / Crypto / Luna / Stablecoin / Terra / TERRAFORMLABS / Ust

S. Korean Exchanges to be Held Accountable for LUNA Crash

by Blockchain NewsMay 24, 2022

The collapse of the Terra ecosystem including the protocol’s two flagship digital currencies, LUNA and UST may have more aftermaths than earlier imagined.

According to the latest reports from local media platform Newspim, the top cryptocurrency exchanges are now likely to be held accountable for failing to implement measures to protect investors from the crash.

In just about a week, UST depegged widely from the expected $1 price while the LUNA coin lost more than 99.99% of its value, charting the course of history as the worst collapse of a major cryptocurrency in recent times.

South Korean regulators and lawmakers are notably looking for who to hold accountable for this unfortunate event and exchanges including Bithumb, Upbit, Coinone, Korbit, and Gopax are the best culprits. With a meeting scheduled for Tuesday, May 24th, a number of government officials, crypto industry giants, and members of the legislative arm will be present to assess the customer protection measures instituted before the crash by the trading platforms.

While it is not clear the exact yardstick and the modalities the inquiries will take, the latest reports confirm earlier stories that show the government has resorted to intensive scrutiny for digital assets trading platforms operating in the country.

With the collapse of the Terra protocol, regulators have levied founder and CEO Do Kwon with tax and fraud charges. Rather than brood over the ongoing mishaps, Kwon is reportedly in search of a functional and acceptable solution that can get the LUNA community back on its feet.

Nonetheless, expectations remain high as the entire ecosystem awaits the next course of action from the Korean watchdogs who have been absolutely concerned about the volatility of the industry and have dealt with exchanges with iron hands prior to this time.

With everyone anticipating a purported forking of the Terra network, investors who stacked LUNA after the price slumped will be carted off with gains as LUNA opened the week with gains as reported by Blockchain.News.

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Tagged : Crypto / DOKWON / Regulation / SOUTHKOREA / TERRAFORMLABS

More Troubles for Do Kwon as S. Korea Levies $78M Tax Evasion Fine

by Blockchain NewsMay 20, 2022

Terraform Labs is currently being charged with tax evasion fraud by the South Korean National Tax Service, a move that complicates matters for the startup that is trying to salvage its collapsed blockchain ecosystem.

Tax Evasion Charges With Proof

Local news sources claim that investigations into the Terraform Labs startup commenced around June last year. CEO Do Kwon, one of the faces of the project is accused of attempting to liquidate his personal properties in order to relocate the business elsewhere.

Terraform Labs is registered in the Virgin Islands and Singapore, however, for the sake of taxation, the South Korean Taxation Act recognizes companies the management operation is concentrated in the country. For Terraform Labs, a total of 100 billion won, (approximately $78 million) is due for payment.

The investigations revealed that Do Kwon is unpleased with the tax policies of the country, and the broad negligence has attracted a cumulative income tax fine of 4.66 billion won on Terra Virgin and a corporate tax fine of 44.47 billion won.

With many pointers showing Terraform Labs and its affiliated organizations are almost bankrupt, it is not clear how Do Kwon, who owns the majority stake in the company, will navigate the current charges against him.

Will the Current Legal Woes Abate?

Blockchain.News reported earlier that Do Kwon is likely to face fraud charges in South Korea, as an organized group of investors who ended up in losses as LUNA and UST collapsed are taking up legal actions against him.

LUNA is still trading at a negligible price while UST is yet to be re-pegged to the United States dollar. Amongst the proposals Do Kwon has shared to revive the protocol is to fork the current network to a new one that will introduce a new token which will be airdropped to old LUNA and UST investors.

Should the proposal which is currently embroiled in controversy pass, it may be the beginning of a new dawn for the embattled CEO and the Terra community as a whole.

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Tagged : Blockchain / DOKWON / Regulation / SOUTHKOREA / TERRAFORMLABS