SEC Alleges Do Kwon Moved $100M In BTC To A Swiss Account

The U.S. Securities and Exchange Commission (SEC) has alleged that crypto mogul Do Kwon transferred over 10,000 Bitcoin from Terraform Labs and Luna Foundation Guard and converted some of these tokens into cash through a Swiss bank account following the business' collapse in May 2022.

Kwon, who is on the Red Notice list of Interpol and is being hunted down by South Korean authorities, is said to have transferred over "10,000 BTC from Terraform Labs and Luna Foundation Guard crypto asset platform accounts" into a cold wallet or "unhosted wallet," which was used to keep crypto assets outside of the crypto exchange platforms' custody.

Kwon and Terraform Labs, the company behind the so-called algorithmic stablecoin TerraUSD (UST) and LUNA, have been periodically transferring Bitcoin from the said wallet since May 2022, a period when the UST started depegging from the dollar and LUNA began crashing.

"On a periodic basis since May 2022, Terraform and Kwon have transferred – and continue to transfer – [b]itcoin from this wallet to a financial institution based in Switzerland and have converted the [b]itcoin to cash," the filing said.

While the U.S. financial regulator did not reveal the name of the alleged Swiss bank, it revealed that "between June 2022 and the date of this complaint, over $100 million in fiat currency has been withdrawn from that Swiss bank."

Last week, the SEC officially charged Kwon and Terraform Labs with defrauding investors for its LUNA and Terra USD (UST) crypto assets.

"We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD," SEC chair Gary Gensler said, adding, "We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors."

"This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC's dedicated public servants," the SEC chairman further said.

UST and LUNA came crashing down in May 2022 and erased nearly $18 billion of Terra's market value, a colossal meltdown that preceded many other bankruptcies and shutdowns among crypto enterprises in 2022.

SEC Division of Enforcement director Gurbir S. Grewal recently commented that the "Terraform ecosystem was neither decentralized, nor finance. It was simply a fraud propped up by a so-called algorithmic 'stablecoin'—the price of which was controlled by the defendants, not any code."