Tag: do kwon

US SEC Agrees to Delay Terraform Labs’ $40-Billion Crypto Fraud Trail for Do Kwon’s Extradition

The US Securities and Exchange Commission agreed to delay a civil trial against Terraform Labs and co-founder Do Kwon for allegedly orchestrating a $40 billion (roughly Rs. 3,32,329 crore) cryptocurrency fraud, so that Kwon can be extradited and attend.

In a Monday filing in Manhattan federal court, the SEC said a “modest” adjournment of the January 29 trial was justified, based on statements from Kwon’s lawyer that Kwon wanted to attend, agreed to extradition from Montenegro, and could be in the United States by mid-March.

It also opposed separate trials for Terraform and Kwon, saying the cases were virtually the same, and that two trials would unnecessarily require whistleblowers and ordinary retail investors to testify twice.

US District Judge Jed Rakoff will decide whether to move the trial date. The SEC asked for April 15, to accommodate scheduling conflicts.

Kwon’s lawyer sought a delay until at least March 18, and on Monday said he would not seek further adjournments even if Kwon were unable to attend on the new date.

The case stems from the collapse of TerraUSD, a “stablecoin” designed to maintain a constant $1 price, and Luna, a more traditional token closely linked to TerraUSD.

Both cryptocurrencies lost an estimated $40 billion or more when TerraUSD in May 2022 proved unable to maintain its $1 peg.

The SEC said Terraform and Kwon deceived investors about the stability of TerraUSD, and how a popular Korean mobile payment app used the Terraform blockchain to settle transactions.

Last month, Rakoff ruled that Terraform and Kwon violated US law by failing to register TerraUSD and Luna.

Kwon also faces related US criminal charges, and an extradition request from his native South Korea. He was arrested in Montenegro last March.

The case is SEC v Terraform Labs Pte Ltd et al, US District Court, Southern District of New York, No. 23-01346.

© Thomson Reuters 2024

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Dogecoin Co-Founder Billy Markus Believes Terra 2.0 Will Attract ‘Dumb’ Gamblers

Dogecoin co-founder Billy Markus who’s been very vocal on Twitter about the TerraUSD stablecoin debacle, now claims that the upcoming launch of Terra 2.0 — the new iteration of the failed blockchain project, will show the world how “dumb” cryptocurrency gamblers really are. The reboot, tabled by Terra CEO Do Kwon over a week back amongst staunch criticism, has been greenlit by the community after the proposal won a vote with a 65 percent majority. Per Kwon’s proposal, the current LUNA token will be renamed LUNA Classic, while a new LUNA-only blockchain will be launched at block 0 on May 27.

While Marcus did not discuss in detail what he meant by the statement, based on recent developments surrounding the Terra project, it is easy to conclude that the Dogecoin founder believes things may still get worse even after Terra launches its new chain.

Just over a week back, Markus put out a controversial tweet following the TerraUSD crash labelling 95 percent of cryptocurrency projects as “scams and garbage.” Adding to his original tweet, Markus said that the people who are going to be “triggered” and “lash out” at his tweet are “scammers.” While the Dogecoin creator’s tweets came along at a time when the crypto market appears to be booming with scam projects, it also seems like a blatant jibe at the Terra community.

Markus’ “scams and garbage” jibe also happened after he’d blasted Terra’s Do Kwon as one of the “tech bros” — a move that eventually led to Kwon blocking Markus on Twitter.

Meanwhile, the Terra team, as part of its revival plan, is working closely with several centralised exchanges to support an upcoming airdrop to its community. 35 percent of the LUNA tokens will be airdropped to holders of pre-attack LUNA and UST. A large chunk of the token distribution will also be allocated for Terra dApp developers and to the overall ecosystem.

Terra’s founder, the charismatic but polarising South Korean entrepreneur Do Kwon, said the motivation for rebooting the currency was to support the wider platform that had built up around Terra.



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South Korea Police Wants Country’s Crypto Exchanges to Freeze Luna Foundation Guard’s Assets

South Korean police authorities have taken measures to freeze assets of the Luna Foundation Guard (LFG) following the Terra UST stablecoin bust at the beginning of May. As per a report by a local news publication, the Seoul Metropolitan Police Agency has asked multiple exchanges to block Luna Foundation Guard from withdrawing any corporate funds. The report adds that authorities have put in the request on suspicion of misappropriation of corporate funds. That said, the exchanges are not bound by law to do so, meaning that whether or not those actions will be carried out is unclear.

Per a report published by the South Korean national broadcaster KBS, the Seoul Metropolitan Police Agency’s Cybercrime Investigation unit has asked several local exchanges to withhold funds held in wallets used by the Terra-affiliated non-profit organisation.

The move comes hot on the heels of Terra suffering the greatest crash in crypto history when its UST stablecoin lost its peg to the dollar, sending its volatile token LUNA into a death spiral and erasing about $40 billion (roughly Rs. 3,10,380 crore) of value in a week.

LFG, the non-profit established to ensure UST’s stability, made efforts to save UST by selling its Bitcoin holdings as the meltdown took hold, but it wasn’t enough to stop UST from crashing. LFG has since claimed that it spent more than 80,000 Bitcoin worth $2.4 billion (roughly Rs. 18,622 crore) to defend the UST peg, leaving only 313 Bitcoin remaining, in addition to its holdings in UST, AVAX, and a few other digital assets.

Since Terra’s UST de-pegging event and LUNA’s collapse, Terra’s founder Do Kwon has been a subject of scrutiny too. Last week, reports emerged that he had been ordered to pay $78 million (roughly Rs. 604 crore) for tax evasion in South Korea, an allegation he later denied, claiming that Terra has no outstanding tax liabilities in the country.

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Terra’s Internal Legal Team Resigns After LUNA, UST Debacle

The in-house legal counsel at Terraform Labs, the blockchain startup behind the UST stablecoin and LUNA governance token has silently resigned from the company. Terraform Lab’s general lawyer Marc Goldich, chief litigation, and regulatory counsel Noah Axler, and chief corporate counsel Lawrence Florio all left the blockchain business in May 2022, according to their LinkedIn profiles. The move arrives in the wake of the collapse of two digital assets connected to the startup as the UST stablecoin de-pegged from its projected $1 (roughly Rs. 78) mark.

Axler and Florio joined Terraform Labs in January 2022, while Goldich started in August 2021. “Terraform Labs has had a challenging week, and a small number of staff members have resigned recently,” a company spokesperson said talking to CoinDesk.

“The vast majority of team members are still dedicated to fulfilling the project’s objectives. Terra is more than UST, with a strong community and a well-defined rebuilding strategy. The Terra spokesman stated, “Our current focus is on implementing our plan to restore the Terra ecosystem.”

The mishap that befell the Terra ecosystem is unprecedented, and one of the rarest seen in the history of the blockchain ecosystem. This is so because Terraform Labs tried to pioneer a new payment technology in the form of algorithmic stablecoin, one that differs markedly from its peers like Tether (USDT), which has its reserves domiciled in US dollars.

The frailty of the algorithmic stablecoin protocol was reflected in how easily it got attacked a little more than a week ago, and recovery was hard to make despite the several attempts to re-peg it back to $1 (roughly Rs. 78). In fact, the Luna Foundation Guard (LFG), a not-for-profit organisation tasked with developing the reserve for the UST stablecoin, unveiled earlier this week how it has depleted its Bitcoin and stablecoin reserve in a bid to restore the UST’s downfall.

In fact, the resignation of the Terraform Labs legal team could push the company to turn to outside counsel for legal affairs.

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