Terraform Labs Sent $4.8M In Crypto To 'Company K'

(Updated with comments from a Terraform spokesperson received Thursday night.)

Terraform Labs (TFL), the firm which created the Terra project, was allegedly involed in laundering money via a shell company run anonymously by the Seoul-based firm as it was caught moving $4.8 million, a report said.

According to a South Korean local media outlet KBS New that has been investigating the Terra collapse, Do Kwon, the creator of UST and LUNA tokens, might be once again in trouble. The KBS report stated that a developer from Terraform Labs confirmed that 'company K' was being used as a shell company operated by Terra. However, the name of the firm was not revealed in the report.

But a Twitter user by the handle FatManTerra, a member of the Terra Research Forum, pointed out that this company K was actually Kernal Labs, "a blockchain consultancy firm." FatManTerra has previously revealed several pieces of insider information about Terra's collapse,

"Employees from company K had great overlap with employees from Terra and often shared the same spaces. Both were incorporated in 2018. Most in company K's employ were straight-up Terra developers. Company K's CEO, Mo Kim, vehemently denied any major affiliations," said FatManTerra.

Terraform called the allegations "unfounded."

As per FatManTerra, South Korea's tax authorities reported that last year Terra sent 6 billion won ($4.8 million) to company K's CEO, which was reported on the books as "other expenses."

"Hypothetically, if the two were one and the same, this would indicate laundering," FatManTerra said.

FatManTerra pointed out that TFL is trying to furiously scrub away their link to 'Kernel Labs,' which further hints that Company K might be Kernal Labs.

"On May 18th, mentions of Anchor/Mirror from Kernel's site were removed. In the T2 proposal, Do [Kwon] hastily removed the mention, despite implying that they were partnered in the creation/maintenance of Terra," screenshots from FatManTerra revealed.

In an update, the member of Terra Research Forum revealed that Korean tax officials have released a statement confirming his initial deduction that Kernel Labs is being used for laundering/evasion. The officials also disclosed that they fined TFL for tax evasion last year due to suspicious transactions with Kernel Labs.

"Only a few people, including CEO Kwon Do-hyung, know the true nature of Terra and Luna," said the other developers who were contacted by KBS.

A Terraform Labs spokesperson told International Business Times in an emailed response: "No. These criminal allegations are unfounded."