SEC Complaint Says Do Kwon Transferred 10,000 Bitcoin From Terra to a Swiss Bank

Do Kwon, the former CEO of Terraform Labs and his infamyHighly unstable stablecoin Terra now has another reason to be on guard. The US Securities and Exchange Commission claimed he and his company transferred hundreds of millions of dollars worth of 10,000 bitcoin from the Terra/Luna project before it inevitably went bust last May.

The collapse of the Terra/Luna stablecoin ecosystem resulted in a loss of around $40 billion for investors and a huge market collapse for the entire crypto industry that is still ongoing. This was due to stablecoin Terra, which was algorithmically intended to remain “pegged” to the price of the US dollar, being “depegged”, resulting in a Death spiral for the cryptocurrencies Terra and Luna.

According to the ComplaintKwon, now 31, “transferred over 10,000 Bitcoin from Terraform And Luna Foundation Guard crypto asset platform accounts in a non-hosted wallet,” meaning a so-called “cold wallet” unrelated to a crypto exchange that can be disconnected from the internet. The SEC then claims that Kwon transferred bitcoin from that wallet to a bank in Switzerland and converted it all into cash.

Although the complaint didn’t identify which bank Terraform Labs’ founder used, according to the SEC’s complaint, Kwon has withdrawn more than $100 million in fiat currency since June of last year.

Just before the crypto collapse in May last year, the price of bitcoin was hovering around $30,000, meaning the 10,000 bitcoins could have been worth $300 million if Kwon had tried to convert them into fiat currency immediately.

The SEC wants Kwon and Terraform Labs to be banned from trading crypto and pay penalties for trading securities illegally. SEC Chairman Gary Gensler said in a press release “This case shows how far some crypto firms will go to avoid compliance with securities laws, but it also shows the strength and commitment of the SEC’s dedicated officials.”

The SEC also claimed that Kwon misled investors about the stability of its UST stablecoin. According to the complaint, the company also lied to investors that the Terraform blockchain was being used by a popular Korean mobile payment app called Chai. Instead, the SEC said Terraform Labs “replicated chai payments on the Terraform blockchain” to make it appear as if there was far more adoption of the technology than there really was.

The complaint relates to a presentation aired on CNBC Africa that the company posted on YouTube back in 2019, where Kwon said: “We had 430,000 buyers through the Chai gateway and most of them came in the last month. And we processed almost 2 [million] Transactions up to date.”

Do Kwon has avoided international prosecution for months after South Korean prosecutors issued an arrest warrant for him. He was last followed Dubai and then Serbiabut the failed crypto founder has repeatedly claimed he is not on the runand went on to state the allegations against him “Politically motivated.” Still, the man, who is definitely not running from law enforcement, has maintained an unusual silence once prolific Twitter account since early 2023.

The entire SEC complaint routinely argues that Terraform Lab’s advertising and transactions involving its Terra, Luna, and wrapped Luna tokens were all counted as securities in some way, shape, or form, meaning the majority of the tokens Unregistered assets have been used in the buying and selling of crypto. The SEC has reportedly stepped up its attempts to control the crypto markets take on other stablecoins like the BUSD token issued by Paxos.