Singaporean police have launched an inquiry into Do Kwon’s Terraform Labs, the company responsible for the currently-defunct TerraUSD stablecoin.
As per a Bloomberg report, the Singaporean police sent an email statement revealing that “investigations have already begun regarding Terraform Labs.” They further added that the inquiries are still “ongoing,” and Kwon is not presently in the city-state.
This announcement arrives shortly after the US Securities and Exchange Commission (SEC) sued Terra founder Do Kwon and his business Terraform Labs for securities fraud.
The SEC proclaimed that “[The SEC] today charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.” Furthermore, they suggested that Kwon and Terraform Labs had shifted more than 10,000 Bitcoin out of their project and were cashing out via a Swiss bank.
Kwon is the co-founder and CEO of the Singapore-based Terraform Labs, the entity that designed the TerraUSD stablecoin. This so-called algorithmic stablecoin was meant to maintain a steady $1 value via a combination of algorithms and trader incentives involving a companion token, Luna.
Still, the stablecoin lost its dollar peg in May last year, following a wave of sell-offs in the crypto arena. Terraform Labs endeavored to partially repair the peg by purchasing $2B UST, but the ongoing sell-off drained those funds, hyperinflated UST’s sister token LUNA, and crashed the price of both LUNA and UST.
Where Is Do Kwon?
Following the disastrous crash of the Terra ecosystem, South Korean officials initiated an investigation into the project after investors lodged a complaint against Kwon. In September last year, the state issued an arrest warrant for Do Kwon.
In December, South Korean prosecutors claimed Do Kwon was “hiding” in Serbia, requesting the European nation’s law enforcement to hand him over to them. The prosecutors said he had moved to Serbia via Dubai in September after leaving South Korea for Singapore around the time of the collapse.
Kwon is wanted on charges of violating the Capital Markets Act and committing fraud, claims which he denies and has called “politically motivated.” Up to now, he has neither confirmed nor denied the rumor that he has taken up residence in Serbia.
A few experts had earlier claimed that Serbia could be a potential hiding spot for Kwon since it has never inked an extradition treaty with South Korea. Without this, specialists believe South Korean prosecutors may be in a difficult position.
This year, a group of South Korean officials visited Serbia in an effort to locate Do Kwon. The prosecutor’s office in Seoul confirmed the news, noting that a high-ranking Justice Ministry official also accompanied the delegation.
The recent spate of bankruptcies in the crypto sector has been linked to the failure of TerraUSD (UST). Following the project’s collapse, a number of prominent crypto firms, including FTX and Three Arrows Capital, declared bankruptcy. Nonetheless, some reports suggest that FTX might have played a role in the downfall of TerraUSD, despite filing for bankruptcy after the UST incident.