Do Kwon accused of siphoning $8M a month from failed Terra project?
@WatcherGuru claimed Terra staff told Securities and Exchange Commission (SEC) investigators that Do Kwon had been withdrawing $80 million a month before the LUNA/UST crash. A month has passed since UST lost its dollar peg, resulting in the loss of $60 billion. During that time, whistleblowers and internet detectives have come forward to reveal a complex web of fraud and mismanagement allegations. These include claims that prominent industry insiders were involved, that code vulnerabilities in the Mirror Protocol were exploited and covered up, and allegations of money laundering. Given the severity of the accusations and the scale of the subsequent devastation, it was only a matter of time before authorities began investigating.
Authorities in South Korea and the U.S. are investigating the collapse of the Terra Classic ecosystem. According to the Financial Times, South Korean authorities are investigating parent entity Terraform Labs on allegations of fraud. At the same time, the U.S. securities regulator is probing whether the marketing surrounding the UST stablecoin violated federal investor-protection rules. Under U.S. securities laws, a virtual currency may fall under the SEC’s scope if U.S. citizens invested in the token to draw a profit from the efforts of those operating the project. Terraform Labs said in a statement that they are unaware of any new SEC investigations outside of inquiries into the Mirror Protocol.
On the allegation that Do Kwon siphoned $80 million a month, crypto YouTuber Lark Davis commented that “the LUNA rabbit hole goes deep.” Founder of crypto consultancy platform Eight, Michaël van de Poppe likened Do Kwon to convicted fraudster Bernie Madoff, saying, “honestly, he deserves jail.” Meanwhile, @FatManTerra said withdrawing hundreds of millions of dollars is both fraud and an act that contributed directly to UST depegging. Do Kwon responded to the claims on social media on June 9 and said misinformation and falsehood are driving the narrative. He promised to ensure the correct information gets out there.