- TFL employees revealed Kwon deliberately withdrew money before LUNA UST’s plummet.
- South Korean authorities also issued investigation orders against Kwon following the SEC’s probe.
- The US court has ordered TFL to comply with the subpoenas issued by the SEC.
Key Terraform Labs’ (TFL) employees allegedly revealed a money-laundering scheme run by Do Kwon when interviewed by the Securities and Exchange Commission (SEC) of the US. The interview was to scrutinize the chain of events that occurred since the $LUNA and $UST crash and the subsequent launch of Terra 2.0.
1/ While most of our efforts had been spent on Terra 2.0 and making sure ecosystem developers can find a home after the depeg incident, we will soon be more proactive in communicating with the press & getting the right information out there.— Do Kwon (@stablekwon) June 9, 2022
After the world witnessed the damage Terra made through its plummet; sweeping the entire market into the red sea, several allegations piled against the founder and TFL, with some holding strong evidence.
As reported by Naver, Kwon knew that Terra was about to crash months before it happened, and ostensibly, within those months, he was keen to cash out as many funds as possible. As this is akin to money laundering, the SEC got involved and probed the depth of the matter.
Reportedly, the interviewed employees confirmed to the SEC that Kwon withdrew $80 million from company funds and sent it to secret wallets and foreign bank accounts before LUNA crashed.
During personal interrogation, some TFL employees apparently warned Kwon about the potential dangers pertaining to the design flaws in the Terra ecosystem, but he didn’t pay heed and continued with his money-laundering racket. A Terra Anchor Developer stated that Kwon deliberately raised interest from 3.6% to 20% causing the UST crash.
Just before the launch, I suggested to CEO Kwon that the interest rate should be lowered, but it was not accepted.
Even the South Korean authorities have instigated an investigation and in that regard, the regulators allegedly gatecrashed the launch party TFL founder and employees were celebrating after the revised network of Terra 2.0 rolled out recently. South Korea held tax evasion charges against Kwon and the employees, because they are yet to pay fines and tax settlements of nearly $78 million.
The US court has ordered Kwon and TFL to comply with the subpoenas issued by the SEC. In case the SEC finds evidence to support this allegation, Kwon and TFL will get into more hot water than they are already in.
Despite being questioned and scrutinized by both the SEC and South Korean authorities for Terra Stablecoins’ catastrophe, many industry experts believe Kwon will not face any criminal charges.