Founder of Terraform Labs, Do Kwon, has withdrawn millions of dollars in crypto from an entity linked to his failed blockchain firm, investigators claim. South Korean authorities are now trying to locate the digital assets that have been allegedly transferred since his arrest in Montenegro in March.
Prosecutors Try to Trace Tokens for Millions of Dollars Tied to Terrausd and Kwon
Crypto entrepreneur Do Kwon has reportedly funneled tens of millions of dollars’ worth of cryptocurrency out of an entity linked to the blockchain project he founded and managed before its collapse last year, according to a South Korean prosecutor working on the case.
Dan Sunghan, director of the financial crime investigation bureau at the Seoul Southern District Prosecutor’s Office, told Bloomberg that the digital coins valued at $29 million were likely moved by Kwon personally, or at his request, after he was detained this spring.
Kwon, who vanished after the crash of Terraform’s stablecoin terrausd and cryptocurrency luna in May 2022, was arrested on March 23, this year, while trying to leave Montenegro on a fake passport. He is currently facing trial in the small Balkan nation.
Dan revealed that South Korean authorities are now trying to find the tokens, which were withdrawn from a crypto wallet belonging to Kwon’s Luna Foundation Guard (LFG), an entity established by Kwon to help maintain terrausd’s peg to the U.S. dollar.
The fate of the crypto assets has been the subject of speculations since the collapse of the Terraform ecosystem and Kwon’s disappearance. Besides these funds, he had previously diverted another 10,000 BTC or more, as alleged by the U.S. securities regulator in February. Kwon and his associates are also believed to hold at least $13 million at Swiss crypto-focused lender Sygnum Bank, Dan Sunghan added.
“We’re assuming that Do Kwon, or someone under his direction, took out the amount and moved it to another wallet, not to Sygnum, and cashed it out somewhere else” after Kwon’s arrest, the Korean prosecutor elaborated, noting that investigators have yet to locate the funds.
The Terraform Labs founder has been accused of crypto fraud in the U.S. and the Republic of Korea, with the two countries seeking his extradition from Montenegro, where he pleaded not guilty to the charge of using forged travel documents and sought to be released on bail.
Kwon may be tried in both South Korea and the United States for the $40 billion crash and potentially spend most of his life in prison, said Dan, who leads the Korean investigation. The 31-year-old man can “be extradited to the U.S. and face trial there, and then have the sentence executed in South Korea and the U.S. after that,” the prosecutor explained.
Do you think Do Kwon has managed to divert the cryptocurrency to a wallet under his control? Share your thoughts in the comments section below.