According to a Bloomberg report, South Korean prosecutors are now investigating the crypto mogul and founder of Terraform Labs, Do Kwon, for allegedly transferring funds to a local law firm just before the tokens he created suffered a US$60 billion wipeout, causing significant disruption in the digital-asset sector.
Did The Fallen Crypto Giant Knew About The Crash?
TerraLabs, founded by Kwon, is a blockchain ecosystem that included a stablecoin token called TerraUSD, and a sister token called Luna, which suffered a significant collapse in May 2022. The collapse wiped out over $50 billion in market capitalization of UST/LUNA and caused over $400 billion in losses for the broader cryptocurrency market.
Following this event, South Korean prosecutors have confirmed that Do Kwon transferred nine billion Won ($9.1 million) to law firm Kim & Chang, including a payment made just before the collapse of the TerraUSD and Luna tokens.
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The prosecutor’s office in Seoul announced on Monday that the report of the transaction was accurate and not false.
The timing of the transfer has raised suspicions that Kwon may have anticipated legal issues as his cryptocurrency project began to struggle. The collapse of TerraUSD and Luna tokens caused a significant shock in the digital asset sector, with investors losing billions of dollars in value overnight.
Kwon was arrested in March in Montenegro and is awaiting extradition to the United States. US prosecutors have accused Kwon of defrauding investors and misusing funds from the Terraform Labs project.
In a statement released by the Securities and Exchange Commission (SEC), Gary Gensler, Chairman of the SEC, alleged that Kwon and other Terraform Labs executives made repeated false and misleading statements to investors to build trust and attract investment.
The SEC claims that these statements were intended to create a false impression of the company’s financial health and prospects, leading to devastating losses for investors.
The former CEO of Terraform Labs is also facing charges in South Korea, including breaching capital-markets law, related to his alleged involvement in last year’s crypto market crash.
Crypto Goes Mainstream In Asia
Asia is taking a leadership role in legitimizing the Web3 space, with Japan joining the movement with the release of its Web3 whitepaper. The whitepaper recognizes the widespread interest in Web3 and proposes that Japan should establish itself as a leader in the space through favorable regulations and tax incentives.
According to Ken Kodama, the co-founder of the Cardano project, Japan’s Web3 whitepaper is a significant step forward for the cryptocurrency and blockchain industry. He noted that Japan has long been a leader in technological innovation and that the country has the potential to become a major player in the Web3 space.
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Kodama also said that standardizing accounting guidelines and establishing a clear registration process for stablecoin issuance will help promote industry transparency and accountability.
The appointment of a Web3 minister and the issuance of crypto visas for skilled workers will also help to attract talent and resources to the sector, further promoting its growth and development.
Japan has long been a leader in technological innovation, and the country’s cryptocurrency and blockchain industry is no exception. With millions of users already in the country, Japan has the potential to become a major player in the global cryptocurrency and blockchain market.
Featured image from Unsplash, chart from TradingView.com