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Extradition Tug-of-War: Terra Investors Advocate for Do Kwon’s U.S. Trial

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Terraform Labs co-founder Do Kwon is a matter of intense debate among investors in South Korea following the Terra-Luna financial failure. Investors prefer that Kwon face the US courts rather than being extradited to South Korea by Montenegro’s high court as was recently decided.

The Investor Community’s Statement shared through a public forum with more than 2,700 members, highlights their fear of Kwon getting away with light punishment if he were brought to trial in South Korea. They maintain that the U.S. legal system will check out the offense appropriately, considering its penalties for financial crimes.

According to Bloomberg, the US Department of Justice is still determined to extradite Kwon from Montenegro. Investors’ statement brings out the difference in sentencing between the two nations, indicating that for Korea, financial crime attracts 30-40 years maximum, while in the USA, counts of each crime can be stacked up consecutively.

Sam Bankman-Fried, the former head of the now-defunct FTX exchange, convicted for defrauding investors, was suggested to be given a hundred years imprisonment which clearly showed this variation.

Pursuing Justice: Terra-Luna Investors’ Plea

The Terra-Luna investors’ plea stems from the fear of unfairness; they are afraid that a mild sentence for Kwon in South Korea means they will have to deal with their financial losses for a long time. They want Kwon to stand trial as if it were the culmination of the financial crisis that resulted from the fall of Terraform Labs’ cryptocurrencies in May 2022.

A loss of over $40 billion in market value occurred as a result of the sudden collapse of Terra’s algorithmic stablecoin and its sister cryptocurrency, Luna, which has prompted calls for responsibility. Kwon and Terraform Labs are being pursued by both US and South Korean regulators who have accused them of fraud and securities law breaches.

The legal battle for Kwon’s extradition is still ongoing, and the entire world is waiting to see what will happen next in this saga of financial crime and quest for justice. The Terra-Luna investor community has a strong position that only through a U.S. trial will the scales of justice be equitably balanced so that victims are not cheated, as these are new financial collapses.

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Is The Crypto Market Finally Free Of Bad Actors? Expert Weighs In On What’s Next

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While the crypto market rejoices in the historic win of Ripple/XRP over the SEC, luck seemed to have run out for Alex Machinsky, former CEO of the bankrupt crypto lender Celsius, who now faces a maximum sentence of 115 years for the multi-billion dollar fraud. Per the DOJ indictment, which was unsealed on July 13, Machinsky has been indicted on seven criminal counts, including securities fraud, commodities fraud, and wire fraud.

Celsius’s former chief revenue officer, Roni Cohen-Pavon, was charged with four criminal counts. The DOJ accused Mashinsky and Cohen-Pavon of orchestrating “a years-long scheme to mislead customers” on the market value of the company’s value and interest in the native token CEL. The indictment was followed by separate lawsuits filed by three federal regulatory agencies: the U.S. Securities and Exchange Commission [SEC], the Commodity Futures Trading Commission [CFTC], and the Federal Trade Commission [FTC].

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Is The Crypto Market Finally Free Of Bad Actors? Expert Weighs In On What's Next 2

Mashinsky, 57, showed up for his appearance in federal court in Manhattan without shackles, wearing a gray polo shirt and trousers. He will be freed on a $40 million bond, which will be guaranteed by his Manhattan home, according to U.S. Magistrate Judge Ona Wang.

Crypto Expert Warns Next Cycle Would Be The Last To Set Things Right Before CBDC Takeover

The top exec joins the likes of former FTX CEO SBF and Terra-Luna mogul Do Kwon, all of whom are now seen as ‘bad actors from the last cycle’. According to Alex Valaitis, founder of the web3 consulting firm W3T, the crypto cleanse is almost complete, referencing the slew of high-profile arrests of major industry players.

While I am generally not a fan of government intervention in crypto, the truth is that NONE of these guys stayed true to the ethos of crypto. Ultimately, it will be up to the collective crypto community to decide where we go from here… Will we embrace the foundations of crypto or will we fall back into the same trap? All I know is that we are running out of time to get things right. This next cycle will likely be the last one before there are mainstream CBDCs.

For Celsius Network and its ex-founder, the most recent litigation is just the latest in a string of difficulties. Mashinsky was sued in January with a similar fraud claim by the attorney general of New York State. Since the SEC sued crypto exchanges Binance and Coinbase Global last month, the cryptocurrency market has been even more precarious, increasing the likelihood of additional regulatory issues for the sector.

Terra: Seoul Authorities To Launch First-Ever Crypto Investigation Unit

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South Korean authorities, who are presently looking into the $40 billion Terra-Luna scandal, plan to create a special investigation unit for crimes involving digital currencies, as per an announcement by the spokesperson of the Seoul Southern District Prosecutors’ Office on July 11. Sources revealed the team would study legal concerns like the securitization of virtual assets and concentrate on crypto crimes like fraud.

Specialized investigators will also be trained, the prosecutor’s office revealed. This is a noteworthy step because it marks the establishment of an investigating division for crypto-related offenses in a prosecutor’s office in South Korea for the first time. The Seoul Southern District Prosecutor’s Office has accused Terraform Labs chief executive officer Kwon Do-hyeong and his associates of defrauding investors, among other charges.

A few days earlier, Daniel Shin, a co-accused in the Terra fiasco, and seven other former employees of the failed cryptocurrency project commenced their first court trials in South Korea. According to a statement in an email, Shin made the decision not to show up as it was a preliminary hearing.

He and nine other Terraform Labs employees were charged with defrauding investors by promoting the Terra stablecoin as a means of payment while being aware that such activities were forbidden. While Shin’s partner and prime accused, Do Kwon, is currently incarcerated in Montenegro, serving a four-month sentence, the jailed founder appears to be moving $18 million worth of USDC stablecoins.

Terra Kingpin Transferred $18M To ‘Unfreezable’ Tokens

On-chain data revealed that the amount was transferred on July 10 from a cryptocurrency wallet linked to the indicted Terraform Labs chief executive officer, said South Korean university professor Cho Jae-woo.

The USDC was changed into cryptocurrencies, per Cho, the director of Hansung University’s blockchain data lab, which could make it difficult for law enforcement to recover Kwon’s assets because some of the tokens are deemed “unfreezable.”

The transfers, first reported by Whale Alert on Twitter, happened on the same day that 5,292 Bitcoin worth over US$160 million were transferred from a wallet connected to the Luna Foundation Guard, a division of Terraform Labs, according to South Korea’s Blockmedia.