South Korean prosecutors have established a connection between the dramatic downfall of the Terra ecosystem and a 9 billion won ($7 million) payment made by Terraform Labs CEO, Do Kwon, to Kim & Chang, a leading South Korean law firm.
The substantial sum sent by Kwon is perceived by prosecutors as a calculated move, seemingly confirming his prior knowledge of the impending collapse and the ensuing legal issues, according to KBS News.
As the ongoing fraud investigation unfolds, prosecutors aim to utilize the information about Kwon’s prepayment to the law firm to establish ill intent. It is worth noting that lawyers from Kim & Chang traveled to Montenegro for a meeting with Kwon and Terraform’s ex-CFO, Han Chang-joon.
Arrest and extradition battle amidst financial controversy
Do Kwon found himself in the custody of law enforcement after being apprehended at Podgorica airport in Montenegro for attempting to travel to Dubai using falsified documents.
The United States and South Korean authorities have both been pursuing Kwon’s extradition since his arrest, with the court’s decision still pending.
South Korean prosecutors disclosed on April 7 that they suspect Kwon of converting illegal funds from Terra LUNA, valued at $1.42, to Bitcoin, which is currently trading at $30,335. Prosecutors have requested that Binance halt all withdrawal requests associated with Kwon.
Investigators have identified a total of 414.5 billion won ($314.2 million) in illicit assets linked to Kwon and his associates, with approximately 91.4 billion won ($69 million) reportedly connected directly to Kwon.
A Binance spokesperson confirmed their cooperation with Korean law enforcement authorities but refrained from commenting on ongoing investigations.
Terra’s debacle
The high-profile arrest of Terraform Labs co-founder and CEO, Do Kwon, has made headlines once more as the United States and South Korea grapple for his extradition.
While the Korean cryptocurrency community is closely monitoring the situation, some prefer Kwon to be extradited to the U.S. due to the possibility of harsher penalties.
The Terra ecosystem’s collapse, particularly the failure of the terraUSD stablecoin project, had global ramifications, with approximately $60 billion vanishing.
The impact was most deeply felt in Korea, where around 200,000 local victims were affected by the 2022 crash. The incident significantly dampened the Korean government’s pro-crypto stance, leading to a less favorable regulatory environment for cryptocurrencies in the country.
The Terra debacle serves as a stark reminder of the risks and challenges associated with the rapidly-evolving cryptocurrency industry, and the importance of regulatory oversight in ensuring the stability and security of this burgeoning financial sector.
