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Do Kwon: Mystery Transfers After SEC Settlement

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Following Terra’s Do Kwon settlement with the SEC, the Luna Foundation Guard [LFG] address has suddenly had many transfers. On-chain sleuths have detected that between 11:29 and 11:33 UTC+8, LFG has moved roughly 2 million AVAX [about $71.2 million] and 39.500k BNB [about 23.5 million USD] to the unmarked address: 0x13…2e27. Although there is no direct relationship between the LFG’s fund transfer and the legal developments, the event’s timing has raised wild speculation.

Meanwhile, Terraforms Labs, another key player in the Terra ecosystem, has come under intense scrutiny for its bankruptcy proceedings, especially in the case of allegedly attempting to seal reimbursements and retention payments to key employees. This lack of transparency is significant because it reflects ongoing concerns about how TFL has managed its finances and handled its obligations to employees and investors.

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Do Kwon: Mystery Transfers After SEC Settlement 2

The bankruptcy trustee has filed an objection, arguing that the Terra community and the public have the right to know how TFL operated leading up to its bankruptcy filings. This push for transparency aligns with the broader legal and regulatory scrutiny TFL and Do Kwon are facing. Another crucial argument highlighted by one observer was that payments to key employees.

Do Kwon: TFL Under the Radar

Just days before bankruptcy, the firm released $6.5 million in incentive payouts to key employees, raising questions about the priorities and decision-making within TFL. This could be seen as an attempt to secure loyalty or mitigate risks to key personnel amidst the financial collapse, which mirrors the concerns about the sudden fund transfers from the Luna Foundation Guard.

The US Trustee even points out, using CEO Cannon Fleece’s own sworn statements, that TFL has no competitors and their operations use open-sourced software, so there’s no inherent trade secret or commercial competitive advantage to protect in redacting data.

Despite not being directly related, both TFL and LFG are likely to be under the radar of regulators and legal authorities due to their interconnected operations and shared leadership. The legal issues faced by Do Kwon and the settlement with the SEC could extend to scrutiny of the Luna Foundation Guard’s activities, especially if there are concerns about fund management and investor protection.

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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3AC’s Zhu Su Blames FTX & DCG For Terra’s Fiasco

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Zhu Su, CEO of the defunct hedge fund Three Arrow Capital or 3AC, has taken to Twitter to pin blame on venture capital firm Digital Currency Group [DCG] and FTX for Terra’s fallout.

In the series of tweets, the co-founder of the Singapore-based firm alleged that DCG and FTX hatched an elaborate plan to attack Terra’s native token LUNA, and Lido’s stETH.

It is worthwhile to mention that Three Arrows was the first major crypto firm to go bankrupt in 2022, brought down by the collapse of cryptocurrencies Luna and TerraUSD in May. It filed for bankruptcy in the British Virgin Islands in late June 2022.

According to Zhu Su, DCG and FTX suffered severe losses during that time. With the collapse of Babel and other crypto firms involved in Grayscale’s GBTC, the losses went beyond 3AC.

For those new, DCG is the parent firm of Grayscale Investments and Genesis Trading. FTX’s recent crash triggered a major liquidity crisis for DCG’s crypto lending subsidiary Genesis Global.

According to the CEO, DCG could have supported the hapless firms in the restructuring process but instead chose to “fabricate a left pocket right pocket callable promissory note that magically filled the hole.”

“This is like a kid losing at poker and saying “I am fine, my dad will pay you, let me keep playing”, he tweeted.

“DCG’s Value Is Criminal Fraud”- 3AC Founder

Zhu Su also alleged that DCG and FTX had been attacking them for months and had taken advantage of 3AC’s fall to “misdirect” the crypto community.

They, like FTX, proceeded to misdirect for months, using various methods to attack us and also not have anyone ask the hard questions which is how did genesis fill the hole. they, like FTX, spent six months taking more deposits while insolvent and hoping mkt goes up.

The 3AC founder then likened DCG’s efforts to criminal fraud and criticized its CEO, Barry Silbert, for approving SBF his FTT-backed loan.

Further, the founder predicted that Genesis would likely be the next to file bankruptcy in the near future. “…they are likely demanding Barry pays back his cashouts the easy way instead of waiting for a DoJ criminal case with restitution punishments,” he stated.

“The damage from yield generator fund blow-ups could have been contained by client-facing firms doing proper restructurings that, while painful for equity holders, would’ve ensured continuity Instead, FTX and DCG committed umpteen frauds to risk client funds rather than dilute”, the 3AC founder concluded.

Court Drops Terra Luna Co-Founder Hyun-Seong’s Warrant

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For some time now, Terraform Labs has been making headlines. According to sources, South Korean authorities summoned the company’s co-founder Daniel Shin, also known as Shin Hyun-Seong, earlier this month for an inquiry into claims that he improperly benefitted from the sale of LUNA [now LUNC] tokens.

According to a South Korean news source, the prosecution wanted to arrest Shin. According to sources, the prosecution has charged Shin with making illegal profits while secretly selling $105 million of LUNA at a market high. He was also charged with violating the Electronic Financial Transaction Act by using customer data from Chai, another company he managed, to promote Luna.

However, Shin had previously stated that in 2020 he terminated ties with Do Kwon and Terraform Labs. He later founded the payment technology company Chai Corporation, where he is currently CEO and founder.

Change Of Events For Terra-Luna Co-Founder

It has just come to light that the court on March 3rd dismissed the arrest order for Shin Hyun-Seong, the former CEO of Chai Corporation and the founder of Terraform Labs, the company responsible for creating the virtual currency known as “Terra Luna.”

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Terra Luna Co-Founders: Daniel Shin (left) and Do Kwon (right)

In the stablecoins meltdown, which shook the world virtual currency market in May of this year, Shin is seen as a crucial player. Even trying to find a replacement hire for former CEO Shin has failed, and with Terraform Labs co-founder Kwon Do-Hyung staying abroad and not coming back to Korea, it can be assumed that the probe will be difficult.

After questioning the suspects (warrant review) and arresting them the previous day, chief judge Hong Jin-Pyo of the Seoul Southern District Court dismissed the arrest warrant at roughly 2:20 am on the same day.

Judge Hong said,

“Considering the attitude toward the investigation, the circumstances, process, and contents of the statement, it is difficult to see that there is a risk of destroying evidence or escaping beyond the scope of exercising the right to legitimate defense.”

Warrants for three early backers and four Terra Luna developers, who were also jointly sought, were all denied for the same reason.