Untraceable Assets and Overseas Crypto Exchanges
Despite the large sum of illegal funds, none of the assets connected to Kwon can be recovered or are within the jurisdiction of South Korean authorities. This is primarily due to the fact that Kwon, now arrested, allegedly converted most of the illicit funds into Bitcoin using overseas cryptocurrency exchanges, rather than investing in tangible assets, as reported by local media outlet KBS.
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SEC Investigation into Terra Collapse
An initial inquiry by the United States Securities and Exchange Commission (SEC) into the downfall of Terra revealed that Kwon had diverted nearly $100 million worth of Bitcoin from the company after its collapse. In a separate report, the SEC accused Kwon of siphoning $80 million a month prior to the disintegration of the Terra ecosystem.
South Korean Authorities Request Binance’s Cooperation
South Korean authorities have urged Binance to freeze any withdrawal requests associated with Kwon. The cryptocurrency exchange confirmed to Cointelegraph that it is cooperating with the prosecutors and providing any necessary assistance.
“We provided Korean LE authorities with the requested assistance. Since we cannot comment on ongoing LE investigations, for any further comment please reach out to the prosecutors.“
Prosecutors Seize Assets of Former Terra Employees
South Korean prosecutors are working tirelessly to trace properties linked to Terraform Labs executives in an effort to recover some of the illicit funds from the Terra debacle. On April 3, they seized residences and other assets to prevent former Terra employees from selling items that could be related to legal cases.
Apart from the homes in Seoul owned by former CEO Shin Hyun-seong and others, prosecutors have also filed foreclosure actions against their foreign-registered vehicles, lands in Hwaseong and Gapyeong in Gyeonggi-do, and Taean in South Chungcheong Province.
The Downfall of Terra Crypto Ecosystem
Terra was once a thriving cryptocurrency ecosystem, but its $40 billion collapse in May 2022 revealed a case of fraud at its core, with former CEO Kwon as the central figure. On-chain data shows that in the three weeks leading up to the depeg of the TerraUSD (UST) stablecoin, one entity dumped over $450 million of UST on the open market. UST began collapsing just four days after the final sale, with Terraform Labs being the entity behind the massive dump.
Kwon’s Arrest and Legal Struggles
Despite an arrest warrant from South Korean authorities and an Interpol red notice against him, Kwon managed to evade capture for nearly a year before being apprehended on March 23 in Montenegro.
How much illicit assets have been identified connected to Do Kwon and his associates?
South Korean prosecutors have identified 414.5 billion won ($314.2 million) in illicit assets associated with Do Kwon and his associates.
Why are the assets tied to Kwon not recoverable by South Korean authorities?
These assets are not recoverable because Kwon reportedly converted most of the illicit funds into Bitcoin using overseas crypto exchanges, placing them outside the jurisdiction of South Korean authorities.
What was the outcome of the SEC investigation into Terra’s collapse?
The SEC found that Kwon had siphoned nearly $100 million worth of Bitcoin from Terra after its collapse, and also accused him of diverting $80 million a month before the ecosystem’s disintegration.
How are South Korean prosecutors attempting to recover illicit funds from the Terra debacle?
Prosecutors are tracing properties linked to Terraform Labs executives and seizing homes and other assets connected to former Terra employees to recover some of the illicit funds.
When and where was Do Kwon arrested?
Do Kwon was arrested on March 23 in Montenegro after evading capture for nearly a year.