The US Securities and Exchange Commission (SEC) has reportedly gained access to the Singaporean records of Do Kwon, the founder of blockchain project Terra, as part of an ongoing investigation. This move by the SEC highlights their increasing focus on regulating the cryptocurrency industry, and could have implications for other blockchain projects and their founders.
Do Kwon, the co-founder of Terraform Labs, has lost his bid against the US Securities and Exchange Commission (SEC) as they are now allowed to seek records from the Monetary Authority of Singapore (MAS) to gain more insight into how Kwon managed Luna Foundation Guard and if he had any involvement in the LUNA/UST collapse of last year. The SEC had alleged that Kwon was the main culprit of the multi-billion-dollar crash that resulted in significant losses for investors. Kwon is currently under custody in Montenegro after being arrested in March.
According to recent coverage by Bloomberg, US District Judge Jed Rakoff denied Kwon’s request to prevent the SEC from checking his data stored at MAS. The agency has records indicating how the Luna Foundation Guard was established and how funds were raised to maintain the value of the algorithmic stablecoin, UST, at $1. In May 2022, UST lost its peg and witnessed a significant drop in its price. Since the native token was closely linked, users started minting more LUNA to stabilize the fallout, creating an infinite arbitrage loop that eventually caused both tokens’ prices to go to zero, leading to colossal losses.
Kwon may spend his life in prison for orchestrating the crypto fraud that resulted in the multi-billion-dollar collapse. He was reluctant to cooperate with regulators and escaped his homeland when the crash occurred. Kwon’s hiding destinations in the past few months included Dubai, Seychelles, Russia, Mauritius, and Serbia. He was finally arrested at the airport of Podgorica after allegedly attempting to flee to another country, carrying a forged Costa Rican passport.
Kwon will most likely remain under custody in Montenegro for an extended period of 30 days before being extradited to the USA or South Korea. If found guilty in the States, he could face more than 100 years in prison, while the maximum penalty in South Korea would be 40 years. The SEC’s move to access MAS records is a significant development in the case against Do Kwon and Terraform Labs.
Overall, Kwon’s alleged involvement in the LUNA/UST collapse has caused significant losses for many investors. The SEC’s latest move brings more substantial opportunity to gain more insight into the case, and Kwon’s future remains uncertain.