A recent report revealed that the United States Securities and Exchange Commission has decided to double its efforts in investigating Terraform Labs as it teams up with the government of South Korea to gather more evidence about the operations of the collapsed Terraform Labs.
The cryptocurrency industry is still very much feeling the negative impact of the collapse of Terraform Labs, which is the company that owned Terra blockchain, LUNA, as well as Terra stablecoin, UST, which cost it in May last year. However, since its fall, the United States regulators and investigation agencies have launched a series of court cases accusing Terraform Labs and its CEO, Kwon Do-Hyung, of several misconduct and fraudulent activities.
According to the report, some investigations conducted by the agency confirmed that the collapsed firm manipulated the crypto market and also mismanaged customers’ funds. Furthermore, provided the extent of the case, a district Judge Rakoff reportedly granted the United States SEC permission to team up with South Korean agencies to investigate Terraform Labs further as well as interrogate the firm’s co-founder, Daniel Shin.
In addition, the report revealed that the agreement between the two countries on the case resulted from the SEC’s wish to gather more tangible proof from Chai Corp, a financial firm based in S. Korea, reportedly owned by Daniel Shin.
US SEC Forms Joint Investigation Team With S. Korea
Shin reportedly established Chai Corp in 2019, and since its existence, the firm has maintained a close relationship with Terraform Labs, sharing data, resources, and other relevant facilities. However, the duo severed their relationship in 2020 without any details as to why. And n9w, the SEC is interested in knowing why they dissociated, and its permission to investigate the situation was granted by the court, causing it to form a tag team with South Korea.
Following the case, a report revealed that in 2022, the SEC charged Terra and its former CEO, Kwon Do-Hyung, to court on the count that Do Kwon’s misconduct caused the collapse of the firm and not market fluctuations which the defendants claimed. In the case document, the SEC alleged that the former CEO operated an illegal cryptocurrency project which resulted in a loss of $40 billion in digital assets.
However, shortly after the allegations surfaced, Terraform Labs denied them, stating it didn’t engage in any form of mismanagement or misconduct in its crypto operations. But Daniel Shin, on the contrary, is still facing multiple fraud allegations, accusing him of knowing about Terraform Labs’ fraudulent schemes from the onset yet hiding the danger of investing in the collapsed exchange from investors.
Do Kwon Nabbed In Montenegro With Fake Identity
In addition, the South Korean regulation agency authorized the detention of Kwon Do in September 2022 when his location was unknown. However, despite no one knowing his whereabouts for more than six months, the former CEO of Terra claimed that he wasn’t hiding.
But in 2023, Filip Adzic, the Interior Minister in Montenegro, announced that Do Kwon was using a false identity to travel, exposing his location. The Intel given by the minister led to the arrest of the former CEO, and the Montenegro court reportedly jailed him on the count of traveling under disguise.
However, Kwon Do-Hyung argued in court that a third party he refused to identify gave him the fake documents. At the time of his arrest, he had two Belgian and Costa Rican passports, each alongside two IDs, one for him and the other for Hang Chang-Joon, a Terraform executive. The documents were all seized as evidence.
Recent updates revealed that Kwon Do-Hyung is now facing legal allegations from prosecutors representing South Korea and the United States of America. And as the lawsuit continues, the joint regulatory agencies have reportedly doubled their efforts in order to fish out the causes and potential misconduct that led to the collapse of Terraform Labs last year.
