US SEC Uncovers Money Laundering Scheme from Do Kwon

UTC by Benjamin Godfrey · 3 min read
US SEC Uncovers Money Laundering Scheme from Do Kwon
Photo: Depositphotos

While most of the legal tussle that seems to be facing Kwon and the blockchain startup is still in their infancy, they are, however, proving to be multifaceted and that they are emanating from different regions might make them hard to fight.

Do Kwon, the Chief Executive Officer of Terraform Labs, might be in more legal trouble as the United States Securities and Exchange Commission (SEC) has uncovered a money-laundering scheme linked to him. Hints about the money laundering scheme were given by some of Terraform Labs employees who were interviewed by the regulator remotely.

The employees confirmed that Do Kwon transfers as much as $80 million (100 billion won) monthly to external wallets. The funds according to the sources were spread out to dozens of wallets and were conducted months before the eventual collapse of the UST algorithmic stablecoin and Luna Classic (LUNC) tokens.

While no one could ascertain what the funds are meant for, the SEC has confirmed that Do Kwon has not received any form of official payments from Terraform Labs for his role as the company’s CEO.

With the collapse of the old Terra tokens shed a number of light on the many flaws being nursed by Terraform Labs with Kwon at the helm of affairs. Employees told the SEC that they had flagged the design of the protocol long ago, called the attention of Kwon to the flaws who blatantly neglected them, and continued business as usual.

Earlier findings showed that Do Kwon had attempted to liquidate the assets of Terraform Labs in a bid to relocate the operating base of the company from South Korea to Singapore. While Kwon currently resides in Singapore according to reports, Terraform Labs has a boatload of legal challenges including tax offenses as filed by the relevant Korean authority.

While most of the legal tussle that seems to be facing Kwon and the blockchain startup is still in their infancy, they are, however, proving to be multifaceted and that they are emanating from different regions might make them hard to fight.

US SEC and the Old Subpoena Served to Do Kwon

Back in September 2021, the US SEC served Do Kwon a subpoena when he attended a conference in New York, as the regulator was looking into the activities of Mirror Protocol. According to the regulator, Mirror Protocol opened access to users to mint synthetic assets that mirror key American tech stocks like Tesla Inc (NASDAQ: TSLA) and Alphabet Inc (NASDAQ: GOOGL) amongst others.

Kwon challenged the claims of the SEC at the time, noting that the regulator does not have the jurisdiction to issue the subpoena. However, the Second Circuit Court of Appeal had ruled that Kwon and Terraform Labs should comply with the SEC’s subpoena, further introducing additional struggles for the embattled CEO.

While Do Kwon is working hard to revive the ecosystem of Terra through the newly launched LUNA token with no dependence or link to UST stablecoin, the legal battles might be a very worrisome distraction. In all, Kwon is judged not guilty of all charges until proven otherwise.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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