Seoul Prosecutors Believe Terra Co-Founder Do Kwon Still in Possession of $100 Million Held in Swiss Bank Account

April 27, 2023 Bitcoin.com

LFG Audit Claims Do Kwon Didn’t Steal Terra Funds—But Can It Be Trusted?

November 16, 2022 The Crypto Briefing

South Korean prosecutors accuse Do Kwon of manipulating Terra’s price

November 4, 2022 Coin Telegraph

Prosecutors have reportedly secured a "messenger conversation" in which Kwon ordered an employee to manipulate Terra's market price.

A local report from South Korea claims that the country's prosecutors have obtained evidence to suggest Terraform Labs co-founder Do Kwon had onceordered an employee to manipulate the price of Terra Luna Classic (LUNC).

A report by Korean Broadcasting System (KBS) on Nov. 3 quotes an official from the South Korean Prosecutors Office, who said they have obtained a "conversation history" in which "CEO Kwon specifically ordered price manipulation."

The reported evidence came in the form of a "messenger conversation" between Kwon and a former Terraform Labs employee. Prosecutors did not disclose further details, noting:

“I can’t reveal details, but it was a conversation history where CEO Kwon specifically ordered price manipulation.”

While the exact details of the price manipulation remain undisclosed, the price action of Terra’s LUNC (formerly LUNA) during the last bull market was undoubtedly one of the most impressive across all cryptocurrencies.

Its price rose over 2,800% from $4.18 in late May 2021 to its all-time high of $119.18 on Apr. 5. 2022, before its cataclysmic fall on Apr. 30, according to CoinGecko data.

The report however notes that Kwon's representative has continued to deny these allegations.

Kwon and his representatives have also previously denied alleged violations of South Korea's capital markets laws.

In September, Terraform Labs said the case against its co-founder has become "highly politicized" and that prosecutors expanded the definition of a security in response to public pressure.

Kwon’s whereabouts now point to Europe

Kwon's whereabouts ultimately continue to remain a mystery, despite the Terra ecosystem co-founder previously arguing he is "not on the run."

Previous reports have suggested Kwon first moved from South Korea to Singapore, before transitioning to Dubai, United Arab Emirates (UAE). The KBS report now suggests Kwon is residing somewhere in Europe, and as of Nov. 3, without a valid passport.

“Kwon, who has an arrest warrant, had his passport invalidated as of today,” the report stated, adding:

“Do Kwon is now an illegal immigrant, wherever he is, in any country, and he cannot travel legally between countries.”

If found, Kwon will also have to deal with a $57 million lawsuit recently filed against him, his fellow Terra co-founder Nicholas Platias and the Luna Foundation Guard (LFG) in the Singapore High Court.

The plaintiff argued that Kwon, Platias and the LFG fraudulently claimed Terra’s stablecoin, Terra USD (UST) — now TerraUSD Classic (USTC) — was “stable by design” and able to maintain its peg to the U.S. dollar.

The worldwide law enforcement effort to pinpoint the controversial CEO’s location hasn’t stopped Kwon from being active on social media, with the most recent Twitter post from Kwon shared on Nov. 3.

Strangely, these last few weeks have been one of the most creative periods of my life. https://t.co/iE6DuwceVF
— Do Kwon (@stablekwon) November 3, 2022

Cointelegraph reached out to Terraform Labs and the South Korean Prosecutor's Office for comment but did not receive an immediate response.

Report: South Korean Prosecutors Accuse Do Kwon of Manipulating LUNA’s Market Price

November 3, 2022 Bitcoin.com

Distribution of assets is ‘not possible at this time’, says Luna Foundation Guard

October 7, 2022 Coin Telegraph

Business

The fund cited “ongoing and threatened litigation” in its reasons for being unable to distribute its remaining assets to UST users starting with the smallest HODLers.

The Luna Foundation Guard, or LFG, a fund focused on the Terra ecosystem, has said it cannot provide a timeline to distribute assets to users following stablecoin TerraUSD depegging from the dollar.

In an Oct. 7 Twitter thread, LFG cited “ongoing and threatened litigation” in its reasons for being unable to distribute its remaining assets to UST users starting with the smallest HODLers. The fund’s reserves held more than $4 billion in assets prior to the market downturn in May, an amount that has dropped to roughly $105 million at the time of publication.

“Distribution is not possible at this time,” said the fund. “While these matters are outstanding, there can be no timeline established for resolution [...] We will not stop advocating for our ability to follow through on these initial plans, and those waiting will be the first to know of new developments.”

1/ Since $UST’s depeg in May, there has been understandable interest in LFG’s assets and how they will be distributed. As mentioned, our goal is to distribute LFG’s remaining assets to those impacted by the depeg, smallest holders first. https://t.co/VOTQDkQZ90
— LFG | Luna Foundation Guard (@LFG_org) October 7, 2022

Crypto Twitter users responding to the announcement criticized the fund for not offering compensation in a speedy manner, and Terra co-founder Do Kwon for his alleged involvement in the collapse.

“If you guys wanted to do it, you would have already done it long time before litigations,” said user SvNem26. “You had enough time but instead DK was blaming exchanges for not providing data.”

Authorities in South Korea have been pursuing a case against Kwon and Terra associates following the collapse of the ecosystem. In September, a South Korean court issued an arrest warrant for Kwon, followed by Interpol adding his name to its Red Notice list. At the time of publication, Kwon’s whereabouts were unknown, but he said on Twitter he was “making zero effort to hide.”

On Oct. 5, prosecutors issued an arrest warrant for Terraform Labs’s business head Yoo Mo, leading to his arrest in South Korea before a judge reportedly dismissed the legal action. South Korea’s Ministry of Foreign Affairs also ordered Kwon to surrender his passport by Oct. 20 or risk having the document voided and not reissued.

Korean Police Ask Crypto Exchanges to Freeze Luna Foundation Guard’s Assets

May 23, 2022 Bitcoin.com

Terra fallout: Stablegains lawsuit, Hashed loses billions, Finder wrong and more…

May 20, 2022 Coin Telegraph

Avalanche

Yield generation app Stablegains is facing a lawsuit after losing around $44 million worth of user funds in the Terra collapse when it previously said it allocated funds “across a number of stablecoins”.

Fallout from the collapse of the Terra ecosystem continues to unfold with the United States-based yield generation app Stablegains facing potential legal action over its losses from the event.

Users believe Stablegain has allegedly lost up to $44 million worth of deposited funds based on a post on a Terra forum by co-founder Kamil Ryszkowski asking for relief funding. He disclosed that a day before TerraUSD (UST) had lost its peg with the U.S. dollar its users’ funds totaled over 47.6 million UST from 4,878 depositors.

Currently the price of UST is trading at $0.075 according to data from CoinGecko.

A letter from class action law firm Erickson Kramer Osbourne (EKO) sent to Stablegains dated May 14 demands a record of customer accounts, marketing materials and any communications regarding UST.

These guys are in deep trouble - they lost about $42m in funds from 4,878 customers and probably have no way to pay it back (they're a small startup) because they went all in on Anchor's invincibility. Conviction bets are great, but not when toying with people's savings. (2/2) pic.twitter.com/p9S5uFILoF
— FatMan (@FatManTerra) May 19, 2022

“You owe an ‘uncompromising duty to preserve’ any evidence you know or reasonably should know will be relevant evidence in a pending lawsuit” the letter said, adding “failure to comply…may result in civil or criminal penalties”.

EKO verified the letters' authenticity to Cointelegraph and said it had opened an investigation into the Terra ecosystem collapse for possible class action.

Stablegains users were able to earn up to 15% annual percentage yield (APY) on deposited US dollars which the company apparently swapped to UST to earn yield on the Anchor Protocol.

Documentation from Stablegains’ website updated seven days ago claims that USDC and UST are “the main stablecoins” used.

The site still maintains that “Anchor is our current go-to protocol, and the basis for the Stablegains stable 15%+ APY rate.”

According to cached results of the webpage Stablegains said it allocates funds “across a number of stablecoins to not be fully exposed to the potential instability of one stablecoin” however users allege the company has since amended the wording on how it mitigates risks.

Stablegains has started allowing withdrawals but USDC will only be provided at the market value of UST. Part of the terms and conditions noticed by a user stipulates the company isn’t liable for losses due to the exchange rate.

Hashed takes a big hit

South Korean based venture fund Hashed has taken an estimated $2.9 billion loss on its Terra (LUNA) holdings according to on-chain data.

The crypto wallet linked to Hashed shows the firm still holds nearly 25 million LUNA which could have netted the firm almost $3 billion if sold at the coins all-time high of $118 in early April.

Reportedly Hashed has said that it is “financially sound” and has not been affected by the Luna price collapse.

Finder survey 92% wrong

In late March comparison website Finder conducted a survey of 36 “fintech specialists” who provided some bullish predictions on the price of LUNA.

The survey concluded that the pundits “thought LUNA would be worth $143 by the end of 2022 before rising to $390 by 2025.”

Dr. Dimitrios Salampasis, a financial lecturer at Swinburne University of Technology in Victoria, Australia was one of only three (8.3% of the experts) doubting Terra and was quoted saying algorithmic stablecoins are “inherently fragile and are not stable at all,” and added “LUNA will be existing in a state of perpetual vulnerability.” Well played Dr Salampasis.

'No plans' for LFG’s AVAX reserves

The Luna Foundation Guard (LFG), which supports/fails to support the Terra network has “disclosed no plans to use” the Avalanche (AVAX) reserves it holds according to a tweet from the Avalanche blockchain team.

The LFG and Terraform Labs (TFL) purchased around $200 million worth of AVAX in April to back its UST stablecoin. The price of AVAX dropped 30% earlier in May on fears the LFG would sell its AVAX to save the UST peg.

However Avalanche says the TFL portion of over 1 million AVAX has a lockup period of one year.

1/ Some members of the Avalanche Community have inquired about details around the $AVAX reserves that the Luna Foundation Guard and Terraform Labs hold.

Tl;dr: the AVAX is currently immobilized. Below is a transparency report
— Avalanche (@avalancheavax) May 19, 2022

LFG’s treasury currently holds $61 million worth of AVAX and is the second-largest holding behind UST in its $225 million reserves. Avalanche says the proposed Terra chain fork is why the foundation isn’t planning to sell.

Delphi: 'You were right and we were wrong'

Crypto-focused research and investment group Delphi Digital published a postmortem on May 18 regarding its losses due to the collapse saying it “always knew something like this was possible”.

“We miscalculated the risk of a 'death spiral' event coming to fruition. We’ve taken some heat for this over the last week, and we deserve it. The criticism is fair and we accept it.”

The firm didn’t disclose the dollar amount of its losses but said it purchased a “small amount” of LUNA worth around 0.5% of its net asset value (NAV) in the first quarter of 2021 which grew to around 13% of NAV as the price gained and the firm made more investments.

It added less than 5% of its Delphi Ventures deals were in “companies or protocols related to the Terra ecosystem” including a February 2022 $10 million investment into the LFG with the firm writing:

“A $10M investment which, based on the current LUNA price, is entirely lost. Delphi Ventures did not sell any LUNA during this event.”

The news on Terra isn’t all bad, Pantera Capital an early investor in Terra revealed that it had cashed out around 80% of its LUNA investment with the firm turning $1.7 million into around $170 million according to partner Paul Veradittakit.

luna foundation guard